January

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Deloitte Australia Accounting Alerts on business combinations

15 Jan 2008

Deloitte Austraila has published Accounting Alert 2008/01 IASB Revises IFRS 3 and IAS 27.

The Alert explores:
  • the key changes and issues arising as a result of the revised Standards
  • why it is important to understand the new requirements well before their mandatory application from 2009
  • action points in planning for implementation
Here is the link to this and other Australian Accounting Alerts on IAS Plus.

 

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Over 1.6 million IFRS e-Learning modules downloaded

15 Jan 2008

As of 8 January 2008, 1,662,656 Deloitte IFRS e-learning modules have been downloaded from IAS Plus. Deloitte's IFRS e-learning was launched at the end of January 2004. Many of the modules downloaded have multiple users because organisations are permitted to install them on their own servers for the internal use of their employees or students.

In addition, the modules are widely used internally by Deloitte staff throughout the global organisation. You can always access IFRS e-Learning without charge by clicking on the light bulb icon on the IAS Plus home page. Thirty-five modules are now available covering virtually all IFRSs. We update the modules regularly. Updates to the following are currently under development:
  • IASs 16, 17, 23, 28, 36, 32/39, and 37
  • IFRSs 1 and 2
Also, two new modules are being developed:
  • IFRS 8
  • IFRIC 12
Our target is to release the updated and new modules by 31 March 2008.

 

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Preliminary decisions by SEC's financial reporting review panel

15 Jan 2008

In June 2007, the US Securities and Exchange Commission formed the SEC Advisory Committee on Improvements to Financial Reporting to study the causes of complexity in the US financial reporting system and to recommend ways to make financial reports clearer and more beneficial to investors, reduce costs and unnecessary burdens for preparers, and better utilize advances in technology to enhance all aspects of financial reporting.

See our News Story of 28 June 2007. Last week, the Advisory Committee held its third meeting and reached some tentative decisions on changes that it might propose. The Committee's deliberations were based on a Draft Decision Memo (PDF 878k) that sets out the definition and causes of complexity and proposals for reducing complexity. The Committee tentatively agreed to support the following proposals, among others:
  • GAAP should be based on transactions and activities, rather than industries, and most existing industry-specific guidance should be eliminated.
  • GAAP should provide for a single method of accounting for a given transaction or event and should not normally include accounting policy choices.
  • The FASB should be the source of interpretations of US GAAP, not other parties.
  • The SEC and others should acknowledge that principles-based standards may result in a reasonable amount of diversity in practice, and the SEC's compliance and enforcement activities should not require restatements that may not be material to users/investors, so long as the basic principles in US GAAP are followed. The SEC should promulgate guidance on materiality in this context.
  • Prior period financial statements should only be restated for errors that are material to those prior periods.
  • The SEC and PCAOB should provide more protections from lawsuits or SEC enforcement actions for companies and auditors exercising reasonable professional judgment.
  • The SEC should require XBRL filings by the 500 largest domestic listed companies, followed by evaluation and a decision whether to extend this to all listed companies.
  • The SEC should provide guidance on corporate websites that provide financial information to investors.
The Advisory Committee will meet again in March and plans to publish its final recommendations in third quarter 2008. Click to go to the Advisory Committee's Web Page on the SEC website.

 

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IASCF Trustees will meet 29-30 January 2008

15 Jan 2008

The Trustees of the IASC Foundation, the IASB's oversight body, will meet in Rome on Tuesday and Wednesday, 29 and 30 January 2008. The public portion of the meeting is the morning of 29 January.

Here is the agenda for that portion of the meeting:
  • IASCF Chairman's Report
  • Report of the Due Process Oversight Committee
    • Assessment of Trustees' effectiveness in oversight
    • Review of Feedback Statement and Impact Assessment Process
    • March Meeting with IASB
    • Priorities for 2008
  • Report of the IASB Chairman
  • Report of the SAC Chairman
  • XBRL Update

 

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Effective date for omitting the US GAAP reconciliation

15 Jan 2008

On 21 December 2007 the US SEC issued its final rule (Release 33-8879) on Eliminating the IFRS Reconciliation to US GAAP.

This rule will become effective on 4 March 2008. Until the effective date, companies are subject to the existing rules regarding the inclusion of US GAAP reconciliation. However, the SEC staff is aware that some foreign private issuers with a fiscal year ending after 15 November 2007 that use IFRSs will want to file their annual report on Form 20-F before 4 March 2008 but also will want to omit US GAAP reconciliation. Because the SEC staff does not want to discourage companies from filing their 20-F before 4 March 2008, these companies are invited to contact the SEC staff to discuss their particular facts or circumstances. Click for SEC Announcement (PDF 34k).

 

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'Big-6' joint paper on principles-based accounting standards

15 Jan 2008

The six largest global accounting networks, including Deloitte Touche Tohmatsu, have jointly published a paper on Principles-Based Accounting Standards.

The paper was launched to coincide with a global public policy symposium in New York, hosted by the firms. The paper, which sets out six key criteria for principles based standards, was debated in a panel that included IASB Chairman Sir David Tweedie and FASB Chairman Robert Herz at the symposium. The six attributes proposed for principles based standards are:
  1. Faithful presentation of economic reality
  2. Responsive to users' needs for clarity and transparency
  3. Consistency with a clear Conceptual Framework
  4. Based on an appropriately defined scope that addresses a broad area of accounting
  5. Written in clear, concise, and plain language
  6. Allows for the use of reasonable judgment
Click to Download the Paper (PDF 607k). In releasing the paper, the CEOs of the six global accounting networks said:

Over the past several years, a growing dialogue has developed about the future of financial reporting and the public company audit profession. In order to advance that dialogue, during the past year, we have engaged in discussions with stakeholders around the world on a number of issues critical to the longterm strength and stability of global capital markets.

In these talks, we have been struck by the breadth of support for International Financial Reporting Standards (IFRSs) as a single set of high-quality, accounting standards that ultimately can be used around the world. Stakeholders indicated their support for IFRS in part because it is more principles-based than US GAAP. There was, however, a lack of consensus on the key characteristics of principles-based standards.

 

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Deloitte guidance on transition to IFRSs in Canada

15 Jan 2008

Canada has announced a plan to fully converge Canadian accounting standards with IFRSs by 2011 (see our Canada Page).

To assist Canadian publicly accountable entities in the task of making the transition to IFRSs, Deloitte & Touche (Canada) has published The Conversion of Canadian GAAP to IFRSs: Volume One – Scoping the Effort in both English and French. This guide – the first in a series – focuses on scoping and planning for the journey to IFRSs. Subsequent volumes will address in increasingly greater detail other aspects of the road ahead, with more specific guidance on issues as they become more relevant to the timing of the process. Click to download: You can find links to these and many other Deloitte IFRS publications on our IFRS Publications Page.
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We comment on the IASB's joint venture proposal

14 Jan 2008

Deloitte has submitted comments to the IASB on Exposure Draft ED 9 Joint Arrangements, which the IASB published on 13 September 2007. If finalised, the ED would replace IAS 31.

The ED proposes that a party to a joint arrangement should:
  • recognise both the individual assets to which they have rights and the liabilities for which they are responsible, even if the joint arrangement operates in a separate legal entity; and
  • recognise an interest in a share of the outcome generated by the activities of a group of assets and liabilities subject to joint control using the equity method. Proportionate consolidation would not be permitted.
Our letter expresses serious reservations about the IASB's proposal and concludes that it is best for the IASB not to proceed with the proposals in ED 9 at this time. Click to Download the Deloitte Letter (PDF 245k). Here is an excerpt:

Part of the IASB's strategy with respect to its short-term convergence agenda is to identify what the Board concludes to be the highest quality solution available from the current population of accounting standards and to move to that standard. We support this approach. However, in ED 9, the IASB has not demonstrated nor put forward conclusive evidence that the approach chosen, i.e. equity accounting, is the highest quality solution for interests in joint ventures, something which the Board acknowledges in its basis for conclusions to the proposed Standard.

As well as eliminating proportionate consolidation, ED 9 proposes a new approach, focussing on contractual rights and obligations rather than the legal form of arrangements. However, as ED 9 is poorly drafted and the IASB's objectives and its rationale for those objectives are not clearly articulated, the requirements and their application are unclear.
Our past comment letters are Here.

 

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We comment on IASB's Improvements Exposure Draft

14 Jan 2008

Deloitte has submitted to the IASB a letter of Comments on the IASB Exposure Draft of Proposed Improvements to IFRSs.

The ED was issued on 11 October 2007 proposing miscellaneous amendments to 25 IFRSs. Our letter expresses concern that "it is not clear what are regarded by the Board as minor amendments and how such amendments are distinguished from 'major' amendments. We are concerned that this lack of clarity might lead to changes to IFRSs that would better be dealt with as part of the normal due process, i.e. separate exposure of the amendments. Although we acknowledge that the Annual Improvements document is subject to due process as set out in the IASB's Due Process Handbook we are concerned that the level of scrutiny may be less for Annual Improvements than it would be for amendments exposed on a stand-alone basis." Click for More Information about the ED. Here is an excerpt from our letter:

We believe that several of the proposed amendments are major amendments to IFRSs and should be exposed as separate documents because the proposed amendments either change or challenge important principles in IFRSs or have consequences beyond the situation the amendment is aiming to address....

In our opinion the following proposed amendments in the exposure draft could not be considered 'minor':

  • the requirement of additional disclosures if an entity is not able/willing to apply IFRSs in full in IAS 1 Presentation of Financial Statements
  • the proposed deletion of guidance for classification of leases of land in IAS 17 Leases
  • the proposed replacement of the term 'fall due' in IAS 19 Employee Benefits
  • the change in the accounting treatment for property under construction/development in IAS 40 Investment Property
Click to view Comments on the IASB Exposure Draft of Proposed Improvements to IFRSs (PDF 224k). Our past comment letters are Here.

 

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IASB's Financial Instruments Working Group will meet

14 Jan 2008

The IASB's Financial Instruments Working Group will meet at the Crowne Plaza London–The City Hotel, 19 New Bridge Street, London, on Thursday, 17 January 2008. The agenda for the meeting centres around two draft IASB Discussion Papers.

Topics to be discussed:

Financial Instruments Working Group 17 January 2008 Agenda

  • Background and aims of the meeting
  • Discussion of the Draft Discussion Paper on Reducing Complexity in Reporting Financial Instruments:
    • Section 1: Problems related to measurement and the possible long-term solution
    • Section 2: A single measurement method for financial instruments and the boards' long-term measurement objectives
    • Section 3: Intermediate solutions to measurement and related problems
    • Key communication messages to accompany the draft DP on Reducing Complexity
  • Discussion of the Draft Discussion Paper on Financial Instruments with Characteristics of Equity:
    • Draft Invitation to Comment

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