February

PCAOB progress in international audit firm inspections

03 Feb 2011

The US Public Company Accounting Oversight Board has released information about the status of inspections of registered non-US accounting firms.

The PCAOB said it has cumulatively conducted inspections of one or more registered firms in 35 jurisdictions as of December 2010. At the same time, the PCAOB noted that in 2010 it was denied access to information necessary to conduct inspections in China, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. Discussions are continuing with the relevant authorities in those jurisdictions in an effort to resolve their objections to PCAOB inspections (the PCAOB executed a bilateral agreement with the UK audit regulator in early January 2011 that provides a basis for the resumption of PCAOB inspections in the UK). The PCAOB has announced the 31 jurisdictions in which the PCAOB plans to conduct inspections in 2011, including all of those in which access was denied in 2010.

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Steven Maijoor is confirmed as ESMA's first Chair

03 Feb 2011

Today, the European Parliament confirmed Steven Maijoor as the first Chair of the newly established European Securities and Markets Authority (ESMA).

This follows the nomination by the ESMA's Board of Supervisors on 11 January 2011. It is anticipated that Maijoor will take office on 1 April 2011. The term for the Chairperson is five years and may be extended once.

Steven Maijoor is currently a Director at the Netherlands Authority for the Financial Markets (AFM) where he is in charge of financial reporting, auditing issues, market integrity supervision and part of the business operations.

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EFRAG to host discussion on IASB financial instruments proposals

03 Feb 2011

EFRAG is hosting an IASB discussion forum to provide European stakeholders with the opportunity to ask questions, raise possible concerns and provide comments about the IASB's proposals on hedge accounting, impairment of financial assets and offsetting of financial assets and liabilities, in an open dialogue with an IASB delegation of Board members and staff.

The meeting is scheduled to take place in Brussels on Monday 28 February 2011 from 12.00 to 17.00 hrs.

Click for EFRAG press release (link to EFRAG website)

Further notes from Day 2 of the additional February IASB meeting

03 Feb 2011

The IASB held an additional meeting in London on 1-2 February 2011, some of which was a joint meeting with the FASB.

We've posted additional Deloitte observer notes from the joint meeting with the FASB during day 2 of the meeting (click through for direct access to the notes):

Wednesday, 2 February 2011

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

New sustainability resources and proposals from the Global Reporting Initiative

03 Feb 2011

The Global Reporting Initiative (GRI) publishes a widely used 'Sustainability Reporting Framework'.

The Framework includes Sustainability Reporting Guidelines (currently in their third version, or "G3 Guidelines") which entities can follow in preparing sustainability reports. The GRI has recently publicly issued a number of documents and resources:

The GRI website can be accessed at www.globalreporting.org.

Deloitte publications update

03 Feb 2011

The following Deloitte publications are now available:

Global publications

Deloitte (Czech Republic)

 

United States SEC extends comment period for proposed resources entity disclosure rules

02 Feb 2011

The United States Securities and Exchange Commission (SEC) has extended the comment period for three Dodd-Frank Act proposed rules, Disclosure of Payments by Resource Extraction Issuers, Mine Safety Disclosure, and Conflict Minerals.

The comment period has been extended from 31 January 2011, to 2 March 2011 to allow interested parties additional time to analyse the issues and prepare comments.

As noted in our earlier story, the disclosures proposed are broadly consistent with the 'Publish What You Pay' coalition (PWYP) proposals included in IASB Discussion Paper DP/2010/1 Extractive Activities.

The proposals are available on the SEC website.

FRC concerned about principal risks and uncertainties reporting

02 Feb 2011

The Financial Reporting Review Panel (FRRP) of the UK Financial Reporting Council (FRC) is concerned about how companies are reporting the principal risks and uncertainties facing their business.

The UK Companies Act 2006 requires directors' reports to contain a business review which must itself contain a description of the principal risks and uncertainties facing the company. In assessing whether directors' reports comply with this requirement, the FRRP has found that in many cases:
  • The directors' report does not clearly identify which risks and uncertainties the directors believe to be the principal ones facing the business.
  • A long list of principal risks and uncertainties is given and the list raises a question as to whether all the risks and uncertainties on the list are actually principal ones.
  • The description given of a risk or uncertainty is in generic terms and it is not clear how that risk or uncertainty applies to the company's circumstances.
  • The disclosure is of a risk framework rather than of the risks or uncertainties themselves.
  • The principal risks and uncertainties disclosed are not consistent with other information given in the report and accounts.
  • The directors' report does not state how the company manages its principal risks and uncertainties.

The FRRP urges the companies not to hide behind boilerplate disclosures since "Boards who retreat behind boilerplate give the impression that they have not themselves understood the risks they face".

The requirements of the UK Companies Act are also reflected in IFRSs. The Conceptual Framework for Financial Reporting states: "Financial information is useful when it is relevant and represents faithfully what it purports to represent." [F:QC4]. IAS 1.25 says that the uncertainties must be disclosed if management has significant concerns about the entity's ability to continue as a going concern; IAS 1.122 & 125 require disclosure of judgements, assumptions and sources of estimation uncertainty in preparing financial statements; and in December 2010 the IASB published an International Financial Reporting Standard (IFRS) Practice Statement Management Commentary, a broad, non-binding framework for the presentation of narrative reporting to accompany financial statements prepared in accordance with IFRSs, which also contains recommended risk disclosures (paragraphs 31 and 32).

Click for FRC press release (link to FRC website).

Notes from Day 2 of the additional February IASB meeting

02 Feb 2011

The IASB is holding an additional meeting in London on 1-2 February 2011, some of which is a joint meeting with the FASB.

We've posted Deloitte observer notes from the first part of day 2 of the meeting (click through for direct access to the notes):

Wednesday, 2 February 2011

  • Post-employment Benefits (IASB)
    • Distinction between defined benefit plans and defined contribution plans
    • Accounting for risk sharing features in a defined benefit plan

We will post notes from the joint IASB-FASB session (where revenue recognition and insurance contracts were discussed) soon.

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

IASB Chairman discusses the future of accounting

02 Feb 2011

CFO.com recently sat down with Sir David Tweedie who discussed IFRSs, professional judgement, accounting education and his successor.

He also discussed how the United States fits into the future of global accounting standards. You can access this article here (link to CFO.com website).

 

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