October

PCAOB proposes standards for assessing audit risk

22 Oct 2008

The US Public Company Accounting Oversight Board, which sets the standards for audits of companies registered with the SEC, has proposed a suite of seven new auditing standards related to the auditor's assessment of and responses to risk.

The proposed standards would supersede the Board's interim auditing standards related to audit risk and materiality, audit planning and supervision, consideration of internal control in an audit of financial statements, audit evidence, and performing tests of accounts and disclosures before year end. Click to download:

The proposed risk assessment standards are as follows:

  • Audit Risk in an Audit of Financial Statements. This proposed standard describes the components of audit risk and the auditor's responsibilities for reducing audit risk to an appropriately low level in order to obtain reasonable assurance in an audit of financial statements.
  • Audit Planning and Supervision. This proposed standard describes the auditor's responsibilities for planning the audit, including assessing matters that are important to the audit, and establishing an appropriate audit strategy and audit plan. The proposed standard also describes the responsibilities of the engagement partner and other engagement team members for supervising and reviewing the work of the engagement team.
  • Identifying and Assessing Risks of Material Misstatement. This proposed standard describes the auditor's responsibilities for identifying and assessing risks of material misstatement. The risk assessment process discussed in the proposed standard includes information-gathering procedures to identify risks (e.g., obtaining an understanding of the company, its environment, and its internal control) and analysis of the identified risks.
  • The Auditor's Responses to the Risks of Material Misstatement. This proposed standard sets forth the auditor's responsibilities for responding to the risks of material misstatement in the general conduct of the audit and specific audit procedures.
  • Evaluating Audit Results. This proposed standard describes the auditor's responsibilities regarding the process of evaluating the results of the audit in order to form the opinion(s) to be presented in the auditor's report. This process includes evaluating uncorrected misstatements and control deficiencies identified during the audit.
  • Consideration of Materiality in Planning and Performing an Audit. This proposed standard sets forth the auditor's responsibilities for applying the concept of materiality, as described by the federal securities laws, in planning the audit and determining the scope of the audit procedures.
  • Audit Evidence. This proposed standard sets forth the auditor's responsibilities regarding designing and applying audit procedures to obtain sufficient appropriate evidence to support the opinion(s) in the auditor's report. In particular, it discusses the principles for determining the sufficiency and appropriateness of audit evidence.

 

IFRSs in the power and utilities industry

22 Oct 2008

Deloitte (United States) has organised an online Power & Utilities IFRS Webcast Series to help executives in those industries understand the implications of IFRS and how to address the associated changes.

Deloitte's Power & Utilities IFRS Webcast series will provide an in-depth look at conversion issues that utility companies must consider. The topics and times/dates of scheduled webcasts are listed below. 

Deloitte's Power & Utilities IFRS Webcast Series

Overview of the Impact of IFRS on Power & Utilities Date: Friday, 7 November 2008 Time: 1 p.m. - 2:30 p.m. EST

International Accounting Standards (IAS) 32 and 39, and Energy Transacting Date: Friday, 14 November 2008 Time: 1 p.m. - 2:30 p.m. EST

IAS 12 - Income Taxes Date: Friday, 21 November 2008 Time: 1 p.m. - 2:30 p.m. EST

IAS 16 - Property, Plant and Equipment Date: Friday, 12 December 2008 Time: 1 p.m. - 2:30 p.m. EST

Regulatory Assets and Regulatory Liabilities Date: Friday, 19 December 2008 Time: 1 p.m. - 2:30 p.m. EST

 

Newsletter on reclassification of financial assets

22 Oct 2008

On 13 October 2008, the IASB published Amendments to IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures.

The amendments are a response to calls from constituents, particularly within the European Union, to create a 'level playing field' with US GAAP regarding the ability to reclassify financial assets. The changes to IAS 39 permit an entity to reclassify non-derivative financial assets out of the 'fair value through profit or loss' (FVTPL) and 'available-for-sale' (AFS) categories in limited circumstances. Such reclassifications will trigger additional disclosure requirements. The effective date of the amendments is 1 July 2008 (which is before the date of issue). The IFRS Global Office of Deloitte has published a special edition IAS Plus Newsletter: Amendments to IAS 39 & IFRS 7 – Reclassification of Financial Assets (PDF 193k) explaining the changes. [This link is to an updated version of the IAS Plus Newsletter issued on 30 October 2008 following some clarifications of the effective date by the IASB. See our news story of 30 October 2008.] You will find all Past IAS Plus Newsletters Here.

 

EC meeting on IAS 39

21 Oct 2008

In our News Story of 16 October 2008, we noted that the European Commission has organised a meeting of 'IAS 39 Stakeholders' to discuss possible credit crisis issues under IAS 39 and IFRS 7 in addition to those addressed in the IASB's recent Amendment Regarding Reclassifications.

The Commission has invited participants to identify issues that should be discussed and has posted links to Participants' Letters and List of Participants.

 

Global tax implications of IFRSs in Spanish

21 Oct 2008

Deloitte (Colombia) has published Implicaciones tributarias globales de los Estándares Internacionales de Información Financiera.

Click to view Implicaciones tributarias globales de los Estándares Internacionales de Información Financiera (PDF 2,447k).
This is a translation of the Deloitte English language publication Global Tax Implications of IFRSs.

 

Joint letter to US SEC supporting fair value measurements

21 Oct 2008

On 15 October 2008 the Center for Audit Quality, CFA Institute, Consumer Federation of America, and the Council of Institutional Investors issued a Joint Letter to US SEC Chairman Christopher Cox urging the SEC not to override the fair value guidance recently issued by the Financial Accounting Standards Board, FSP FAS 157-3 Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active (FSP).

The letter states:

A move by the SEC to suspend fair value accounting would be a disservice to the capital markets, would be inconsistent with the views of investors, would harm the credibility and independence of the standards setting process, and would run counter to fundamental notice and comment principles. With third quarter financial statements now in process and year-end 2008 imminent, such a change could jeopardize already-fragile investor confidence.

No one disputes that these are trying economic times. However, the current crisis of liquidity, credit, and confidence was not caused by fair value accounting; rather, sound accounting principles helped expose the problem. Fair value accounting with robust disclosures provides more accurate, timely, and comparable information to investors than amounts that would be reported under other alternative accounting approaches.

Click to view the Joint Letter to US SEC Chairman Christopher Cox (PDF 60k).
Click to go to our comprehensive page of Credit Crunch Information.

US SEC to hold roundtable on mark-to-market

20 Oct 2008

The US Securities and Exchange Commission will host the first of two roundtables on 'mark-to-market' accounting and current market conditions on 29 October 2008, at 9:00 am EDT.

The roundtables will provide input to the SEC as part of a Congressionally mandated study pursuant to the Emergency Economic Stabilization Act of 2008. The date and time of the second roundtable will be announced at a later date. The roundtable will consist of two panels. The first panel will discuss the interaction between mark-to-market accounting for financial institutions and the current economic situation. The second panel will focus on potential improvements to the current accounting model and implications of possible changes. The panels will include investors, accountants, standard setters, regulators, business leaders, and other interested parties. Representatives from the FASB, IASB, and PCAOB will be present as observers. The panel discussions will focus on:
  • The effects of mark-to-market accounting on financial reporting by financial institutions.
  • Potential market behavior effects from mark-to-market accounting.
  • The usefulness of mark-to-market accounting to investors and regulators.
  • Aspects of the current accounting standards that can be improved.
Click for SEC Press Release (PDF 48k).

 

Credit crisis audit considerations

19 Oct 2008

The US Public Company Accounting Oversight Board will meet with its Standing Advisory Group on 22-23 October 2008 in Washington.

One of the issues that the advisory group will discuss is audit considerations relating to the current economic environment. The agenda paper for this topic discusses possible considerations in upcoming audits, including:
  • Fair value measurements
  • Other than temporary impairment
  • Credit derivatives
  • Going concern
  • Pensions/other postretirement benefits
  • Receivables
  • Inventory
  • Other asset impairments
  • Disclosures

Click to download the agenda paper for this topic: Emerging Issue - Audit Considerations in the Current Economic Environment (PDF 177k).

Notes from day 5 of the October 2008 IASB meeting

18 Oct 2008

The International Accounting Standards Board held its regular October 2008 meeting at the IASB's offices, 30 Cannon Street, London on Monday to Friday 13-17 October 2008. The meeting was open to public observation and was being webcast.

Click here to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the meeting.

 

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.