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June

Senate approvals bring SEC up to full strength

30 Jun 2008

The United States Senate has confirmed three nominees to the five-member US Securities and Exchange Commission.

The Commission has been operating with three Republican commissioners since February – Chairman Christopher Cox, Paul Atkins and Kathleen Casey. Commissioner Atkins's term expires at the end of this month. Chairman Cox and Commissioner Casey continue. The new Commissioners are:
  • Luis Aguilar, partner in the law firm of McKenna Long & Aldridge (Democrat)
  • Elisse Walter, a senior executive at the Financial Industry Regulatory Authority (Democrat)
  • Troy Paredes, a professor at Washington University School of Law (Republican)
Press reports have said that the Commission has delayed its consideration of IFRSs for domestic registrants, among other issues, until the vacancies were filled.

 

We have updated our IASB agenda project timetable

30 Jun 2008

We have updated our IASB Agenda Project Summary and Timetable to reflect the IASB's decisions on its work plan made at the Board's June 2008 meeting.

The timetable calls for publication by the IASB of 24 consultation documents and 23 final pronouncements between now and 2011, including:
  • 6 Discussion Papers
  • 18 Exposure Drafts
  • 22 Final IFRSs
  • 1 Final Guidance Document

SEC roundtable on fair value accounting

29 Jun 2008

The US Securities and Exchange Commission will host a public roundtable on fair value accounting standards on 9 July 2008, at the Commission's headquarters in Washington, D.C.

The roundtable will be webcast live and later archived on the SEC's Website. The purpose of the roundtable is to facilitate an open discussion of the benefits and potential challenges associated with existing fair value accounting and auditing standards. The roundtable will be organized as two panels with the first panel discussing fair value accounting issues from the perspective of larger financial institutions and the needs of their investors; and the second panel discussing the issues from the perspective of all public companies, including small public companies, and the needs of their investors. The panel discussions will focus on:
  • the usefulness of fair value accounting to investors
  • potential market behavior effects from fair value accounting
  • practical experience and potential challenges in applying fair value accounting standards
  • aspects of the current standards, if any, that can be improved
  • experience with auditors providing assurance regarding fair value accounting
Click for SEC Press Release (PDF 36k).

 

Heads Up on FASB forum on moving US reporting to IFRSs

27 Jun 2008

The latest issue of the Heads Up newsletter from Deloitte & Touche LLP (United States) summarises issues discussed at the 16 June 2008 FASB forum regarding whether and how to move the US financial reporting system to IFRSs.

New IFRS XBRL taxonomy for 2008

26 Jun 2008

The International Accounting Standards Committee Foundation has announced the release of the IFRS Taxonomy 2008. The IFRS Taxonomy 2008 is a complete translation of International Financial Reporting Standards (IFRSs) as published in the IFRS Bound Volume 2008 into XBRL, an eXtensible Markup Language (XML) that is used to communicate information between businesses.

The taxonomy is published in the same languages as the IFRS Bound Volume 2008 and includes support material such as the Taxonomy Architecture Paper and the Taxonomy Extenders Guide. Click for IASCF Press Release (PDF 44k).

 

Notes from the final day of the June 2008 IASB meeting

21 Jun 2008

The IASB held its June 2008 meeting at its offices, 30 Cannon Street, London, on 17-20 June 2008.

Click here to go to the Preliminary and Unofficial Notes Taken by Deloitte Observers at the meeting.

Notes from IASCF constitution roundtable 19 June 2008

21 Jun 2008

The Trustees of the IASC Foundation met with a range of interested parties on 19 June 2008 to discuss their initial proposals to revise the IASC Foundation Constitution.

The roundtable was held from approximately 9:30 am to 3:30 pm at the Renaissance Chancery Court Hotel, London. Click here for the Trustees' Draft Proposals (PDF 153k), which served as the basis for the discussions. The two main proposals are whether to:
  • Establish a formal link to key public institutions by creating a 'monitoring group' of representatives of official organisations, including securities regulators, that would approve Trustee appointments and review Trustee oversight activities.
  • Expand the IASB to 16 members from the present 14, and provide for geographical balance. Geographical balance would mean that normally there would be four IASB members from each of North America, Europe, and the Asia/Oceania region, plus four others appointed from any area, subject to maintaining overall geographical balance.
Four sessions of discussions were held during the day. At each, between six and eight constituents were invited to give opening remarks; Trustees present responded; and then a more unstructured conversation followed. Participants in each session raised similar issues; consequently, these notes summarise the discussions by topic rather than by session.

Notes from IASCF Constitution Review Roundtable
19 June 2008, London

Monitoring Group

To provide a formal link between public authorities and the IASC Foundation/IASB, the Trustees will propose that a Monitoring Group be established. This Monitoring Group would participate in the Trustees appointment process and approve the appointment of Trustees; and review and provide advice to the Trustees on their fulfilment of the oversight responsibilities set out in the IASCF Constitution. The initial composition of the Monitoring Group is proposed to be:

  • (a) the responsible member of the European Commission,
  • (b) the managing director of the International Monetary Fund,
  • (c) the chair of the IOSCO Emerging Markets Committee,
  • (d) the chair of the IOSCO Technical Committee (or vice chair or designated securities commission chair in cases where either the Chair of an EU securities regulator, Commissioner of the Japan Financial Services Agency or Chair of the US Securities and Exchange Commission is the chair of the IOSCO Technical Committee),
  • (e) the commissioner of the Japan Financial Services Agency,
  • (g) the chair of the US Securities and Exchange Commission, and
  • (f) the president of the World Bank

All participants supported establishing the Monitoring Group. Some saw it as an essential safeguard because, when a jurisdiction adopts IFRSs, it essentially surrenders its sovereignty over accounting standards. At the same time, some people expressed concern that there would be an increase in the 'politicisation' of the work of the IASB. Consequently, many commentators addressed the Monitoring Group's terms of reference, and in particular whether it should be permitted to propose candidates for nomination as Trustees. Participants were concerned that Trustees should continue to be independent and not beholden to securities regulators.

While agreeing that it is essential that securities regulators be represented on the monitoring group, some commentators expressed concern about the absence of other market regulators such as banking, insurance, and pension supervisors. In addition, some participants noted that the proposed monitoring group does not include a regulator directly involved with non-publicly accountable entities (SMEs) – for which the IASB is developing a separate IFRS.

Some commentators suggested that, in assessing the proposal, it would be helpful if the Trustees set out their rationale for the proposed composition of the Monitoring Group.

The IASCF Chairman stated in one session that to change the composition of the Monitoring Group 'will lead to quite a few complications, especially if you want to limit the number of people in the Monitoring Group'.

Monitoring Group's mandate

While supporting the creation of the Monitoring Group, many participants in the roundtables said that it must be clear that the IASCF Trustees are responsible for governance of the IASCF and the IASB. Many felt this should be made explicit in the proposals issued for comment.

Almost all participants wanted to ensure that the Monitoring Group did not, in any way, compromise or impair the IASB's independence, especially the ability to set the technical agenda. Some participants felt that the proposals had gone far enough to provide such assurance. In particular, proposed Constitution paragraph 19(c) was singled out for criticism by several participants:

...The Monitoring Group shall have the authority to request meetings with the Trustees or separately with the chairman of the Trustees (with the chairman of the IASB as appropriate) about any area of work of either the Trustees or the IASB. These meetings may include discussion of, and any IASC Foundation or IASB proposed resolution of, issues that the Monitoring Group has referred for timely consideration by the IASC Foundation or the IASB.

Some participants were concerned that this could involve the Monitoring Group directly the governance of the Foundation and the IASB. Because some of the agencies represented on the Monitoring Group are political, participants expressed concern that the IASCF and the IASB must not be politicised.

Some suggested that the Monitoring Group should be viewed as an 'audit committee', and it must avoid getting involved in operational aspects of the entity and avoid conflicts of interest. In their view, the Monitoring Group should monitor the Trustee appointment process and approve actual appointments, but it should be precluded from nominating Trustees directly.

In addition, some commentators expressed concern that the Group's role in providing 'advice' to the Trustees on the discharge of their oversight role could lead to regulatory influence on the IASB and, in particular, the technical agenda.

Trustee Appointments Advisory Committee

Views were mixed on this issue. Some participants thought that the Appointments Advisory Committee still had an important role (presuming that the Monitoring Group could not nominate Trustees) in identifying and proposing candidates for appointment to the Trustees. Others thought it was unnecessary and that the Trustees' committees could discharge this function. Many were indifferent.

Expanding the membership of the IASB and requiring an explicit geographical component

Almost all participants expressed concern that an explicit geographical component in the composition of the IASB would compromise the required technical competence and other criteria for Board membership. These fears were made forcefully; in spite of repeated assurances from Trustees present that the Criteria for IASB Membership in the Constitution were not at issue.

Many participants expressed concern that requiring an explicit geographical component could lead to Board members being seen to represent constituencies, rather than the global capital market participants, etc. Geographical representation at the Trustee level was necessary and accepted; it was not necessary at the IASB level. The current principle in the IASCF Constitution that the Board not be 'dominated by any particular constituency or geographical interest' was sufficient. With respect to voting requirement, many thought that a supermajority should be required-some wanted a 66% or even higher majority.

As to size, many participants were concerned that, at 14 members, the IASB was already at the upper limits of operational effectiveness. Expanding the Board to 16 members could run the risk of slowing down projects and fragmenting the Board, forcing it to work in sub-groups and reaching sub-optimal decisions. The IASCF Chairman did not seem to be concerned, hinting that sub-groups were not a bad thing. This comment was not welcomed by participants and did not build confidence in the outcome.

Others supported expanding the Board, noting that it would help in the Board's liaison responsibilities.

Other issues raised

Several constituents raised significant concerns about the way in which the IASB's agenda, especially with respect to the Memorandum of Understanding was being conducted-in particular that no opportunity for debate on the priorities and timescales set had been afforded constituents at large. One participant called this lack of consultation 'a disgrace'.

Next Steps

The IASCF Trustees will consider the submissions made at their meeting in Washington DC in July 2008 (public session on 8 July 2008). It is expected that the proposals will be published for public comment in mid-July 2008 with comments due in mid-September 2008.

This summary is based on notes taken by observers at the IASCF Roundtable and should not be regarded as an official or final summary.

 

FASB decides to eliminate QSPEs and modify consolidation model

20 Jun 2008

The US FASB has decided to amend its Statement No. 140 'Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities and Interpretation No. 46(R) Consolidation of Variable Interest Entities' to make the following important changes, among others:

  • Remove the concept of a qualifying special-purpose entity (QSPE) from Statement 140 and the related scope exceptions from Interpretation 46(R)
  • Changes the derecognition provisions in paragraph 9 of Statement 140
  • Modify the consolidation model in Interpretation 46(R)
As a result, if those decisions become final, previously unconsolidated entities may have to be consolidated. Also, because of the potential modifications to the existing Interpretation 46(R) model, enterprises involved with variable interest entities (VIEs) (even VIEs that are not structured finance vehicles) will need to rethink their previous consolidation conclusions. The FASB is expected to issue an Exposure Draft for public comment on the amendments to Statement 140 and Interpretation 46(R) in IQ 2008. All of the details are in Heads Up Newsletter 18 June 2008 (PDF 182k) from Deloitte & Touche LLP (United States).

 

Notes from the third day of the June 2008 IASB meeting

20 Jun 2008

The IASB held its June 2008 meeting at its offices, 30 Cannon Street, London, on 17-20 June 2008.

Click here to go to the Preliminary and Unofficial Notes Taken by Deloitte Observers at the meeting.

Correction list for hyphenation

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