May

SEC (US Securities and Exchange Commission) (dark gray) Image

All SEC registrants (US GAAP and IFRSs) would file XBRL data

16 May 2008

The US Securities and Exchange Commission has proposed to require all public companies in the United States to file their data with the SEC in XBRL format.

XBRL is a computer software language that labels companies' financial and other data with codes from standard lists (taxonomies) so that investors and analysts can more easily locate and analyse desired information. XBRL reporting would be required for registrants using either US GAAP or IFRSs as published by the IASB. The transition would take three years:
  • Companies with worldwide public float over $5 billion (approximately the 500 largest SEC registrants) using US GAAP would be required to make financial disclosures using XBRL for fiscal periods ending in late 2008. That data would become available in early 2009.
  • The remaining companies using US GAAP would provide XBRL data over the following two years (mid-cap accelerated filers in 2009 and small-cap in 2010).
  • Companies using IFRSs would provide the disclosure for fiscal periods ending in late 2010.
The XBRL disclosure would be provided as additional exhibits to annual and quarterly reports and registration statements. Companies also would be required to post this information on their websites. Click for:

 

PCAOB (US Public Company Accounting Oversight Board) (dark gray) Image

PCAOB plans round-table on reliance on non-US auditor oversight

15 May 2008

The US Public Company Accounting Oversight Board (PCAOB) will host a public round-table discussion in Washington on 25 June 2008 on a proposal regarding the circumstances in which it could rely fully on non-US auditor oversight bodies in the context of inspections.

Representatives of investors, registered accounting firms and foreign regulators will participate in the discussion. The round-table will focus on the PCAOB's proposed Policy Statement: Guidance Regarding Implementation of PCAOB Rule 4012. The comment period closed on 4 March 2008. You can find Information about the Proposal here on IAS Plus. The proposal and the comment letters received are available on the PCAOB's website: www.pcaobus.org.

 

European Union (old) Image

European Commission recommendation on auditor oversight

15 May 2008

The European Commission has issued a Recommendation on 'external quality assurance for statutory auditors and audit firms auditing public interest entities'.

It provides guidance to Member States for establishing an independent and effective system of inspections on the basis of the Directive on Statutory Audit.

The Recommendation suggests:

  • Strengthening the role of the public oversight authorities in inspecting audit firms
  • Strengthening the independence of the inspection system and inspections teams
  • Policies and procedures for ensuring that inspectors, experts, and the management of the quality assurance system are objective and independent
  • Enhanced transparency on the outcome of the inspections
Click for:
Hong Kong Image

Study on impact of converging to IFRSs in Hong Kong

15 May 2008

The Hong Kong Institute of Certified Public Accountants has published Consultancy on the Impact of HKFRS Convergence Project: A Review of the Hang Seng Index Constituent Stocks.

The Hang Seng Index (HSI) is an index currently reflecting 43 leading stocks listed on the Stock Exchange of Hong Kong. Hong Kong Financial Reporting Standards (HKFRSs) were fully converged with IFRSs effective 1 January 2005. The HKICPA commissioned this research to assess the impact on HSI constituent companies of adopting the converged HKFRSs in 2005 and to identify the resulting changes in operating performance and financial position. The study also identified specific standards that contributed the most to those changes. The study focussed on the 32 HSI companies that adopted HKFRSs in 2005 (others had elected earlier adoption). The study is copyright HKICPA, and we are grateful to them for giving us permission to post it on IAS Plus. Click to Download the HKICPA Study (PDF 1,472k). Selected findings:

Impact on profit:
  • Average increase in net income was 53.63% (median increase 2.59%) – hence wide disparity in impact.
  • The five standards that had the greatest effect on profit were:
    • HKAS 32 HKAS 39 (Financial Instruments),
    • HKFRS 2 (Share-based Payment),
    • HKAS 40 (Investment Property) and Int 21 (Income Taxes – Recovery of Revalued Non-Depreciable Assets),
    • HKAS 17 (Leases), and
    • HKFRS 3 (Business Combinations) and HKAS 36 (Impairment of Assets)
  • On average, HKFRS 2 and HKAS 17 reduced profit, while the others increased it.
  • The study did not find any discernible relationships between the magnitude of profit change and company characteristics such as size, debt level, profitability level, or change before the new standards.
Impact on opening equity:
  • On average, the new standards decreased opening equity by 2.00% (median decrease 0.92%).
  • The five standards that had the greatest effect on opening equity were:
    • HKAS 32 and HKAS 39 (Financial Instruments),
    • HKAS 40 (Investment Property) and Int 21 (Income Taxes – Recovery of Revalued Non-Depreciable Assets),
    • HKAS 17 (Leases),
    • HKAS 16 (Property, Plant and Equipment), and
    • HKFRS 3 (Business Combinations) and HKAS 36 (Impairment of Assets)
  • On average, HKAS 32/HKAS 39 and HKFRS 3/HKAS 36 reduced equity, while the others increased it.
News default Image

Near-final draft of Amendments to IFRS 1

15 May 2008

The IASB has made available to subscribers a PDF version of a near-final draft of Amendments to IFRS 1 and IAS 27 – Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate.

Heads Up Image

FASB's Valuation Resource Group discusses 24 fair value issues

14 May 2008

The US Financial Accounting Standards Board established a Valuation Resource Group (VRG) to provide the FASB staff with information about implementation issues regarding fair value measurements used in financial reporting.

The VRG met on 8 May 2008 and discussed four new valuation issues, as well as twenty ongoing issues. Deloitte & Touche LLP (United States) has published the 13 May 2008 edition of the Heads Up Newsletter (PDF 136k) explaining the four new and twenty ongoing issues:

Four New Valuation Resource Group Issues
  • VRG Issue No. 2008-7: Observable Versus Unobservable Fair Value Measurements in the Current Credit Environment – Factors Affecting the Reliability of an Observable Input
  • VRG Issue No. 2008-8: Determining Whether a Discount Should Be Applied for a Restriction on Sale
  • VRG Issue No. 2008-9: Employee Benefit Plans – Fair Value of Participant Loans
  • VRG Issue No. 2008-10: Contingent Liabilities – Using an Expected Value Computation

Twenty Ongoing Valuation Resource Group Issues
  • VRG Issues No. 2007-1: Fair Value of Mortgage Loans and No. 2007-2: Unit of Account – Decomposition of an Asset
  • VRG Issue No. 2007-3: How to Factor Liquidity Into Fair Value Measurements
  • VRG Issue No 2007-4: Elements of Consideration for Determination of 'Active Market'
  • VRG Issue No. 2007-5: Determination of Principal Market
  • VRG Issues No 2007-6: Highest and Best Use: Defensive Value and No. 2008-1: Accounting for an Asset That the Acquirer Does Not Intend to Use or Intends to Use in a Way Other Than Its Highest and Best Use
  • VRG Issue No. 2007-7: Assets Acquired Through an Auction
  • VRG Issue No 2007-8: Assets and Liabilities Without Markets
  • VRG Issue No. 2007-9: Pension Plan Disclosures
  • VRG Issue No 2007-10: Use of Net Asset Value in Fund-of-Funds Investments
  • VRG Issue No. 2007-11: Fair Value of a Liability With Third-Party Guarantees
  • VRG Issue No 2007-12: Highest and Best Use – Land Example
  • VRG Issue No. 2007-13: Definition of 'Significant' in Evaluating Inputs for Fair Value Hierarchy Classification
  • VRG Issue No 2007-14: Accounting for Transaction Costs in Determining the Fair Value of an Investment
  • VRG Issue 2008-2: Customer Relationships
  • VRG Issue 2008-3: Valuation of Intangible Assets Using the 'Current Replacement Cost' Method
  • VRG Issue 2008-4: Meaning of 'Legally Permissible' in Assessing the Highest and Best Use
  • VRG Issue 2008-5: Fair Value of Inventory
  • VRG Issue 2008-6: Allocation of Portfolio-based Credit Adjustments for Hedge Effectiveness Testing
e-learning (50) Image

Two more IFRS e-Learning modules are released

14 May 2008

We are pleased to announce that two new Deloitte IFRS e-Learning modules have been released:

  • IFRIC 12 Service Concession Arrangements
  • IFRS 8 Operating Segments
This brings to 37 the number of modules that are available for download, without charge, by clicking on the light bulb icon on the IAS Plus home page.
34 of the 35 existing modules were updated in April to make them technically accurate for the IFRSs in force at 31 December 2007. The one remaining module, IAS 32/39 (Part 1), is under final review, and we expect to release it shortly.

 

Currency (dk gray) Image

ECB's Trichet urges IASB action on off-balance sheet entities

14 May 2008

In a speech at the Corriere della Sera International Forum 2008 in Milan on 12 May 2008, Jean-Claude Trichet, President of the European Central Bank, said that "the International Accounting Standards Board (IASB) and other relevant standard-setters should take urgent action to improve the accounting and disclosure standards for off-balance sheet entities and to enhance guidance on fair value accounting, particularly on valuing financial instruments in periods of stress".

He also called on banks and other financial institutions adopt the recent recommendations of the Financial Stability Forum (FSF), endorsed by the G7 Finance Ministers and Central Bank Governors, in their upcoming half-year financial reports. Those recommendations urge financial institutions to expand their disclosures of qualitative and quantitative information about risk exposures, write downs, fair value estimates for complex and illiquid instruments, and off-balance-sheet entities. Click to download Mr Trichet's Speech (PDF 66k).

 

Deloitte Comment Letter Image

Deloitte letter to SEC on 'foreign issuer enhancements'

13 May 2008

Deloitte Touche Tohmatsu (DTT) and its member firms have submitted a Letter of Comment to the US SEC on the SEC's proposed rule Foreign Issuer Reporting Enhancements.

The SEC Release (PDF 225k) proposes several amendments relating to the current filing and disclosure requirements of foreign private issuers (FPIs), including the acceleration of filing dates.

The movement toward IFRSs as a basis for financial reporting in jurisdictions outside the United States will affect many of these proposals. Accordingly, we suggest that to achieve a more consistent transition, the Commission give particular attention to transitioning certain of the proposals in the release to correspond with when FPIs are required to use IFRSs.

Although the Commission is not proposing a broader current reporting disclosure regime for FPIs, we believe that current reporting requirements should be given further consideration, preferably in a separate release. Currently, FPIs are not subject to the disclosure requirements of Form 8-K. Instead they are subject to the requirements of Form 6-K, whose disclosure derive from information made public in the issuer's home country. This disclosure regime differs substantively from the 'current' disclosure regime of domestic registrants. We believe that the current reporting requirements for multinational companies that have reporting obligations in many jurisdictions should be consistent. Therefore, we encourage the SEC to work through the International Organization of Securities Commissions to address the broader issue of current reporting requirements by companies listed across borders.
Click to view Letter of Comment to the US SEC (PDF 29k).
Past Deloitte letters of comment are Here.

 

IASC Foundation (blue) Image

IASCF Trustees will hold round-table on constitution proposals

13 May 2008

The IASC Foundation Trustees have announced that they are going to hold a public round-table discussion in advance of issuing their proposals on Phase 1 of the IASCF 2008 Constitution Review.

Phase 1 is addressing whether to:
  • Create 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
Details of the public round-table have not yet been announced. In announcing the round-table, the Trustees released an updated timeline for the Constitution Review (the previous timeline is Here):

Updated Timeline for the 2008 Constitution Review

March-April 2008

Trustees developed proposals and document for the Constitutional Review.

May-June 2008

Trustees to meet interested parties to discuss proposals before publication of document on the first part.

June 2008

Publication of proposals on public accountability and IASB size/geographical diversity – the first part of the Constitution Review. Comment period to end in August or September 2008.

June 2008-August 2008

Trustees to continue to meet interested parties to discuss proposals on the first part.

September 2008

Constitution Committee to develop proposals to present to full Trustees, based upon analysis of comment letters and other input on the proposals in the first part.

October 2008

Trustees to conclude the first part of the Constitution Review at Beijing meeting. Changes to take effect for 1 January 2009.

October or November 2008

Trustees to publish a discussion document seeking views on other issues to be incorporated as part of the Constitution Review – the second part of the Constitution Review.

October 2008-January 2009

Trustees to meet interested parties to discuss the second part of the Constitution Review.

February 2009

Trustees to develop list of issues and the Constitution Committee to develop proposals.

April 2009

Trustees to publish other constitutional proposals on issues identified.

April 2009-October 2009

Trustees to hold a series of meetings, possibly including public round tables, on proposals.

October-November 2009

Conclusion of the Constitution Review.

Click to view the IASC Foundation Trustee press release (PDF 55k).

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