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New standards for reporting greenhouse gas emissions

13 Oct 2011

The Greenhouse Gas Protocol (GHG Protocol), a partnership between the World Resources Institute and the World Business Council for Sustainable Development (WBCSD), has released two new standards which aim to allow businesses to better measure, manage, and report their greenhouse gas emissions.

The two new standards are:

  • The Corporate Value Chain Standard seeks to identify opportunities for companies to make more sustainable decisions about their activities and the products they produce, buy and sell
  • The Product Life Cycle Standard provides a tool to assist companies to measure the greenhouse gas emissions of an individual product, covering materials, manufacturing, use and disposal.

The measurement of greenhouse gas emissions is of importance in both sustainability and integrated reporting, and indirectly in accounting for any recognised liabilities under emissions trading and similar schemes.

Click for press release (link to WBCSD website).

Study finds the global financial crisis has increased support for IFRSs

13 Oct 2011

The Association of Chartered Certified Accountants (ACCA) has published a survey showing among other results that the International Financial Reporting Standards (IFRS) are more favourably viewed following the global financial crisis.

163 senior executives from a wide range of industries, including the financial sector, from the US, Europe, the Middle East and Asia took part in the survey that was designed to gauge support for of global standards. The findings were complemented with in-depth interviews with nine executives and investors. According to the study the main results of the survey were:

  • Increasing familiarity with global standards in financial reporting continues to break down resistance to their implementation.
  • The effect of the financial crisis has been to improve perceptions of global standards among investors and issuers.
  • Investors favour global auditing standards.
  • Rising demands from investors and customers for greater disclosure is fuelling an appetite for global standards in non-financial reporting.
  • Executives believe that global standards or benchmarks in corporate governance would encourage more 'long-term' thinking.
  • Although a more distant aspiration, there is a clear recognition of the potential benefits of integrated reporting.

In the foreword to the study, ACCA CEO Helen Brand comments on the results and argues, that they are a clear sign that the US Securities and Exchange Commission should adopt the IFRSs.

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Minutes from the third meeting of the Experts Group on Non-Financial disclosure by Companies

13 Oct 2011

The European Commission's Expert Group on disclosure of non-financial information by EU companies held its third meeting on 30 September 2011.

The European Commission's Expert Group on disclosure of non-financial information by EU companies held its third meeting on 30 September 2011.

The discussions of the expert group focused on the nature, content and scope of potential legislation. They were based on a non-paper circulated to the members of the expert group ahead of the meeting and included as Annex 2 to the minutes.

No next meeting is scheduled for the time being, but the Commission may call for another meeting in the future depending on the developments this initiative may make. A legislative proposal on the disclosure of non-financial information by companies is planned for the first half of 2012.

Minutes from the meeting are now available on the EC's website (PDF 33k).

More information on international developments in integrated reporting is available on our IAS Plus page on integrated and sustainability reporting.

IFSB issues two new Exposure Drafts for public consultation

12 Oct 2011

On 12 October 2011, the Islamic Financial Services Board (IFSB) issued two new Exposure Drafts (EDs) for a three-month public consultation period.

The EDs are drafts of guiding principles on:

  • Liquidity Risk Management
  • Stress Testing for institutions offering Islamic financial services (IIFS).

The drafts were approved for issuance by the Technical Committee, in its 25th meeting held in Abu Dhabi on 6 October 2011. The IFSB invites comments from among regulatory and supervisory authorities, international organisations, market players, academics and other interested parties on the two drafts.

Summaries of the EDs and links to the documents themselves are available in a press release on the IFSB website. The IFSB will be organising a Public Hearing for the two EDs on 16 November 2011 in Kuala Lumpur, Malaysia.

The Bruce Column – Ten years of EFRAG achievement

12 Oct 2011

In mid-October EFRAG, the European Financial Reporting Advisory Group, celebrates its tenth anniversary.

And Françoise Flores, its Chairman, is proud of its achievements and feels it has been an influential force for good, rallying the rest of the world behind the IFRS flag. In particular she sees it as having had a parallel life alongside the International Accounting Standards Board, (IASB). EFRAG, she says 'has accompanied the adoption of IFRS in Europe and has closely monitored and assessed the development of IFRS during these ten years. We have also devoted significant efforts with our national standard setter partners to start proactive activities and hence pool European resources and energies together'.

For her the most significant point was the decision which Europe took in 2002, and which came into force in 2005, mandating the use of IFRS by all listed companies across the EU. 'When IFRS were adopted in Europe EFRAG was put in a unique position', she says. 'There was nobody just like us. And from 2009 on we can see that EFRAG had created a group which has since been seen as the model for other regional bodies around the world, like AOSSG, the Asian-Oceanian Standard-Setters Group, for example. Organisations are uniting at a regional level so that they count in the financial reporting debate. We at EFRAG have created a model and it has been proved to be relevant to other areas around the world. It has been a remarkable ten years'. She sees EFRAG as very much a catalyst for bringing regional bodies together, following the example which she sees EFRAG as having set.

Looking ahead to the next ten years she sees the EFRAG role as maintaining the pressure and providing influence. But it is in the field of influence that she sees the most activity. 'I don't think the role of EFRAG is changing, or has changed', she says. 'EFRAG remains responsible for exercising influence on behalf of Europe in the development of IFRS and assisting the European Commission on accounting matters. The period has come though, when EFRAG has the opportunity and the means to serve its first and foremost objective, to stimulate debate on accounting matters in Europe so as to make a European view emerge and influence the financial reporting debate. That is what we do in our proactive activities'.

And that means expanding that part of its role and bringing about changes in behaviours. 'It is about bringing European constituents into the heart of the financial reporting debate. Our perspective is that standard-setters have the habit of presenting proposals without inviting people to participate in the analysis of whether the changes are needed. We must ensure that the analysis of whether, and if so how, things can be improved is carried out with European constituents' input before any proposal is put forward'.

And that means collaboration as well as change. 'We are very keen on having a process of discussion papers so that people don't feel defensive about the possibility of change', she says. 'And this should help the IASB tremendously. It would mean that ideas will be at least half sold in that people will already have understood what needs to be fixed. That would be a very positive development. We explain this process in our joint discussion paper on Considering the Effects of Accounting Standards with the UK ASB. This discussion paper has attracted very wide attention. We have been receiving responses from all around the world, from Japan, Singapore, Australia, Canada, IFAC and the international firms, for example. People have realised that at the regional level and from there at global level more can be achieved. Hence the debate can be richer and more intense'.

She is looking forward to the decision from the SEC on whether, or how, the US will move to IFRS. She sees the possibility of the US moving onto IFRS as being the final piece in the jigsaw, the piece which confirms the sense of the European decision back in 2002. 'If the US comes on board the European decision which chose IFRS so boldly in 2002 would be seen as 100% successful. That decision has brought a lot of benefits', she says. 'And these benefits remain even if the US does not join'.

'And in any case FASB is already participating. They joined us to work together on our respective projects to develop a disclosure framework which aims to create a consistent framework for both US and International GAAP. They are in the mood for sharing with others. They already consider themselves as participants. An SEC decision would make that complete'.

But there is always the possibility, increasingly an outside one, that the SEC would turn the idea down. And some old-school continental Europeans might push again for the old idea of setting up a European standard-setter. Flores rules that completely out of court. 'The SEC decision is in my view not really a question of whether, it is more a question of when', she points out. 'It is difficult to imagine that in the longer run the US wouldn't adopt IFRS in one way or another. IFRS is the only possible candidate as a single set of global financial reporting standards. The idea that Europe would set standards for itself has gone. It went with the adoption of IFRS. When they were adopted it was because Europe had proved completely unsuccessful at agreeing common standards. There are lots of benefits of adopting IFRS. And extending globally is another benefit. There will be no return to European standards'.

And the changes at the helm of the IASB, with Hans Hoogervorst succeeding Sir David Tweedie, will leave the central point of the global financial reporting revolution unchanged. 'After the successful chairmanship of Sir David Tweedie I expect that Hans Hoogervorst, their new Chairman, will develop the organisation towards further success. The IASB is facing different challenges and will probably deal with them in a different manner. But I don't expect it to make any change in the objective of making IFRS global. The IASB is at a particular juncture and any changes which do come will reflect the next steps rather than the organisation being turned upside down because there has been a change of Chairman. It has more to do with getting to a new IFRS era than just because the leadership has changed.'

She sees the IASB as having become a central global institution and one which fits well with EFRAG's objectives. 'The IASB is an institution which is robust enough to stand by itself and easily adjust to a change in leadership', she says. 'As for the future for EFRAG I think we will continue to enjoy a positive and constructive relationship with the IASB and that relationship may be even enhanced. I look forward to Hans and Ian leading the organisation'.

Meanwhile she welcomes the progress being made with the current IASB projects. 'EFRAG had called for a more reasonable pace in the development of standards and so we welcome re-exposure of the proposals on revenue recognition and leases', she says. 'And we welcome forthcoming efforts to bring IFRS 9 and FASB latest decisions onto common ground. We believe that our recommendations have the potential of helping the IASB and FASB to reach this common ground and therefore are hoping that the next developments in the work on financial instruments will be positive. We hope the insurance project will be finalised on a reasonable basis without unnecessary delay. Europe needs such a standard. We have launched a series of field tests to be performed on the basis of the revised Revenue Recognition proposals. This is to help the IASB in the performance of such field tests that we have claimed for a long time should be carried out before any significant change to IFRS is finalised'.

As for the prolonged saga of the European endorsement of IFRS 9 she is determined. 'The European Commission position is well known', she points out. 'The endorsement process is in their remit. It will be considered when IFRS 9 is completed. Developments in IFRS 9 will continue and I don't see any reason why it should take years. The IASB will sustain its efforts in the project and IFRS 9 will come as a natural candidate for endorsement. The European Commission position is very clear'.

And she is equally forthright on the endorsement of future IASB projects. 'In those decisions, or amendments, that the IASB has published there are significant changes', she says. 'The most significant is what we call "the consolidation package". So far we have issued two draft endorsement advice letters assessing changes to IAS 1 and IAS 19 and they are positive. In the case of IFRS 10, 11 and 12 our analysis is still in progress'.

As for the future she wants to see a greater emphasis on consistency rather than simple activity. 'In early August we issued our preliminary views on the IASB agenda consultation', she says. 'We believe that IASB's first priority is to ensure consistency in the application of IFRS globally. We are also promoting that idea that the revision of the conceptual framework be resumed and that a period of calm be observed so people can enjoy financial reporting on a consistent basis for a while. And that would also help the IASB devote the necessary efforts to achieving consistency of application. The main focus for the IASB in the years to come should be consistency of application. Having jurisdictions adopt IFRS is not easy. But the real challenge is to have a unique set of standards being applied'.

And she sees EFRAG and the IASB moving closer in the years to come. 'Over the years the IASB's interest in EFRAG's activities has grown', she says. 'It is very much because EFRAG and European standard setters work so closely together. We have enjoyed a positive and constructive arrangement with the IASB. So if it becomes more formal it is do no more than just describing what we have already put into practice'.

Robert Bruce October 2011

Related links



PCOAB proposes amendments to improve transparency for public company audits

12 Oct 2011

The US Public Company Accounting Oversight Board (PCAOB) has proposed amendments to its standards that are designed to improve transparency in public company audits.

The proposed amendments include requirements to disclose the engagement partner's name in the audit report and the PCAOB Annual Report form. The proposal also would require that the audit report contain the names of other accounting firms and other people not employed by the auditor who took part in the audit. Comments on the proposal are due by 9 January 2012.

Click for (all links to PCAOB website):


Japan and US regulators enter into an exchange of letters

12 Oct 2011

The Public Company Accounting Oversight Board of the United States (PCAOB) has entered into a cooperative agreement with the Japan Financial Services Agency (JFSA) and Certified Public Accountants and Auditing Oversight Board (CPAAOB) of Japan.

This agreement facilitates "cooperation between the Authorities to the extent permitted by their respective national laws in the oversight, inspections and investigations of auditors subject to the regulatory jurisdictions of both the PCAOB and the JFSA/CPAAOB". Also, the agreement includes provisions governing the sharing of confidential information between the oversight authorities.

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European Outreach Meetings on the IASB Agenda Consultation — additional meetings

11 Oct 2011

As reported earlier, the European Financial Reporting Advisory Group (EFRAG) will organise outreach events on the IASB consultation on its future work programme published in July 2011.

Additional locations and dates for these events have been announced:

  • Copenhagen: Monday 31 October 10.00 hrs
  • Oslo: Tuesday 1 November 12.00 hrs (to be confirmed)
  • Amsterdam: Wednesday 2 November 12.30 hrs
  • Stockholm: Wednesday 9 November
  • Warsaw: Tuesday 15 November (to be confirmed)
  • Brussels (together with the European Commission): Friday 25 November (to be confirmed)

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Agenda for IFRS Foundation Trustees meeting

11 Oct 2011

The IFRS Foundation Trustees will meet in Paris on Thursday, 13 October 2011. The tentative agenda is shown below.

Agenda for the IFRS Foundation Meeting
Thursday, 13 October 2011
Thursday 13 October (09:00-12:00)
  • Report of the IASB Chair
  • Report of the Due Process Oversight Committee
  • Report of the IFRS Advisory Council Chair
  • Report of the Education and Content Services Committee
  • Update on the Strategy Review
Agenda papers for the meeting are available on the IASB website.


UK ASB welcomes guidance paper on forbearance and impairment provisions

10 Oct 2011

The Financial Services Authority (FSA) recently published a Guidance Paper "Forbearance and Impairment Provisions — Mortgages".

The UK Accounting Standards Board (ASB) of the Financial Reporting Council (FRC) has noted that it welcomes the release of this paper, since the ASB believes it is "a contribution towards the continued development of better financial reporting in the UK".

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