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Update on accounting and financial reporting requirements in Kosovo

22 Feb 2012

A new law on accounting, financial reporting and auditing has been approved in Kosovo. The law introduces laws defining which companies will apply which accounting standards, and it defines the powers of responsibilities of the newly formed Kosovo Council for Financial Reporting (KCFR).

Presented below are the main points of the new law.

Financial reporting requirements

  • Large business organisations and all business organisations registered as limited liability companies or shareholder companies in Kosovo, shall apply International Financial Reporting Standards (IFRS), including interpretations, recommendations and guidance issued by the International Accounting Standard Board, as approved by the Kosovo Council for Financial Reporting (KCFR)
  • Consolidated financial statements of relevant business organisations shall be in accordance with Directive 78/660/EEC of EU and IFRS
  • Financial statements shall be audited by statutory audit firms or auditors that are licensed to carry out statutory audits by the KCFR
  • All statutory audits in Kosovo, which include all audits required under this law, and external independent audits of other business or not-for-profit, socially owned or publicly owned enterprises or other entities as mandated by other applicable laws in Kosovo shall be carried out in accordance with the International Standards of Auditing (ISAs), and related interpretations, guidance and pronouncements of the International Auditing and Assurance Standards Board (IAASB), and by auditors that are approved by the KCFR to carry out statutory audits

KCFR functions and responsibilities

  • To draft and approve Kosovo Accounting Standards in accordance with International Accounting Standards IAS/IFRS and relevant EU directives
  • Supervise and implement Auditing Standards in accordance with ISA and relevant EU directives
  • Licensing and keeping register of auditors as well as of the audit firms and professional associations of accounting and auditing
  • Adoption of the standards of professional ethics, internal quality of auditing firms
  • Supervise continuous education, quality assurance and disciplinary system

Click for:

Latest batch of editorial corrections to IFRSs released by the IASB

22 Feb 2012

The IASB has posted to its website a new batch of 'Editorial Corrections to IFRSs.'

This batch makes editorial corrections and changes to the Bound Volume (Red Book) 2011, Bound Volume (Education) 2011, Bound Volume (Education) 2010, Bound Volume (Blue Book) 2012, Bound Volume (Blue Book) 2011, IFRS 9 Financial Instruments (issued November 2009), IFRS 10 Consolidated Financial Statements (issued May 2011), IFRS 12 Disclosure of Interests in Other Entities (issued May 2011), IAS 19 Employee Benefits (issued June 2011), Disclosures — Transfers of Financial Assets (issued October 2010), Presentation of Items of Other Comprehensive Income (issued June 2011), and Mandatory Effective Date of IFRS 9 and Transition Disclosures (issued December 2011).

Access the editorial corrections on the IASB's website.

The Bruce Column — Independence, eligibility, and the IASB

21 Feb 2012

Independence and accountability have always been the big issues for the IASB and the IFRS Foundation. Now the Foundation’s Monitoring Board has produced a report which deals with the most sensitive issues. Robert Bruce, our regular resident columnist takes a look.

The question which has faced the IASB from its outset is how to square the circle of independence and accountability. The answer has always been to show more rigorous governance. The better the governance the less wriggle-room there will be for critics. And the latest in these efforts is the report on the review of the IFRS Foundation’s governance by its Monitoring Board (the securities markets authorities responsible for monitoring the activities of the IFRS Foundation).

The process itself was rigorous. Its aim was to assess whether the current governance arrangements promoted  ‘the primary mission of the International Accounting Standards Board, (IASB), of developing high quality, understandable, enforceable and globally accepted accounting standards, and provide for both the accountability and independence of the IASB’.  To achieve this, a series of proposals for governance improvements were published last year, a full consultation period ensued, responses were considered, and roundtables were held around the world.

One of the more obvious concerns was that the crossroads where independence, ownership, influence and other issues could collide should be properly defined. For example, the elusive goal of ‘financial stability’ which motivates prudential supervisors should not be a motivation, necessarily, of standard setters.

All this has been clarified in the report. ‘While there were some strong calls for the involvement of prudential authorities in the monitoring process’, says the report, ‘a larger number of respondents cautioned that financial stability should not be regarded as a primary objective of financial reporting, and that inputs from such standpoint should be made to the standard-setter through other existing channels. Considering the diversity of views and also the possible undesirable effect any changes to the current set-up would have on stakeholders’ perceptions, the Monitoring Board concluded that the status quo should be maintained’.

Overall the report is governed by a simple statement. The aim is ‘to increase understanding and introduce greater clarity’, and a whole variety of measures are introduced to achieve just that. But there is one which contains a degree of political diplomacy. And this is the membership of the Monitoring Board. This will continue on the same basis. ‘Full membership of the Monitoring Board will continue to be confined to capital markets authorities, defined as those authorities responsible for setting the form and content of financial reporting for use in the capital markets in respective jurisdictions’.  And membership is to be expanded from the current five seats to eleven, by including additional capital markets authorities, ‘primarily from major emerging markets’. . But they are also to ‘refine the existing membership criterion’. At present members need to have a strong commitment to: ‘supporting the development of high quality international accounting standards’. But now that commitment has been refined ‘to call for demonstration of this commitment through domestic use of IFRSs in the jurisdiction’s capital market and participation by the jurisdiction in Foundation funding. To become and/or remain a member, all permanent members must meet that criterion, and will be assessed for their eligibility on a regular basis’.

This answers the persistent gripe of countries around the world which see countries participating in the IFRS decision-making process while not using IFRS. Now if you want a seat at the table you have to be in the game as well. So what of the prominent current absentees from the actual playing-field, like Japan and the US, who hold two of the current five seats? Well, like so much in accounting, it is all about the timing.

The report, with a degree of deftness, makes this clear. ‘The first assessment of eligibility will start in early 2013’, it says. And, ‘during early 2012, the Monitoring Board intends to develop and document in its Charter a definition for the criterion “use of IFRSs”’. In other words the development of the criteria and the first assessment will not begin until after the point, hopefully, when the SEC makes it reasonably clear what happens with IFRS in the US. And Japan has long been expected to follow suit. The report itself was, after all, produced by the IOSCO secretariat in Japan.

This report is a clever and helpful piece of work. And by putting independence, understanding and clarity at its centre it has shown that its heart is in the right place.

IASB releases agenda for its February meeting

21 Feb 2012

The IASB will be holding its February 2012 meeting on 27 February – 2 March 2012, much of it a joint meeting with the FASB.

You can access the agenda on our February 2012 IASB meeting page.  We will also post Deloitte observer notes on this page as they are available.

Fifth edition of IFAC survey reveals key concerns, support for global IFRS adoption

20 Feb 2012

The International Federation of Accountants (IFAC) has published its Fifth Annual Global Leadership Survey. IFAC received 123 responses to the survey from a total of 93 member bodies and associates in 71 countries and jurisdictions, as well as four affiliates, regional accountancy organisations, and groupings.

Some of the key findings of the survey include:

  • The following issues were rated highly:
    • reputation and credibility of the profession
    • the needs of small and medium size practices and small and medium sized entities
    • the difficult global financial climate
    • public sector and sovereign debt issues
    • increase regulation (including proposed European Union (EU) legislation).
  • International Financial Reporting Standards (IFRS) were viewed as being most important for global adoption, implementation and enforcement, with International Standards on Auditing (ISAs) being ranked second, then followed by the Code of Ethics for Professional Accountants, and International Public Sector Accounting Standards (IPSASs)
  • Respondents indicated that IFAC‘s top priority should be setting standards and guidance, but with a number of other areas also important.

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

IASB event for 'IFRS teachers'

20 Feb 2012

The IASB has announced that the IASB technical staff will hold a one-day event for those teaching International Financial Reporting Standards (IFRSs).

The event will be held in the IASB Board Room in London on Monday 14 May 2012 and will include a number of sessions taking a variety of forms — presentations, question and answer sessions, a Framework-based teaching workshop and feedback from the participants.

Participation is limited to a maximum of 40 IFRS teachers, with no more than four participants from each country. Click for more information (link to IASB website).

Eurostat consultation on the suitability of IPSAS for the EU Member States

20 Feb 2012

The Statistical Office of the European Union (Eurostat) has issued a public consultation on the assessment of suitability of the International Public Sector Accounting Standards (IPSAS) for the Member States of the EU.

On 8 November 2011 the Council of the European Union adopted the Council Directive concerning the requirements for the fiscal framework of the Member States. It calls on the Commission to carry-out by the end of 2012, an evaluation of the suitability of IPSAS for the EU Member States.

The IPSASs are based on International Financial Reporting Standards (IFRSs) and are adapted to meet the specific needs of the public sector. The focus of IPSAS is accrual accounting.

This consultation period ends on 11 May 2012. All citizens and organizations can participate in the consultation. Contributions from national governments / national authorities and stakeholders will be asked directly. A summary of the results of the consultation will be published in the second half of 2012.

Click for the Eurostat consultation page (link to European Commission web site).

IASB and FASB to hold roundtable meetings on revised revenue recognition proposals

17 Feb 2012

The IASB and FASB have announced plans to hold several public roundtable meetings in March, April, and May 2012 to discuss the revised joint revenue recognition proposals.

The locations and dates of the roundtables are as follows:

An additional roundtable meeting will be scheduled in May 2012 for US private entities.

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

Current status of accounting and audit reforms in Turkmenistan

17 Feb 2012

In July, 2010, the President of Turkmenistan issued a Decree approving the National Accounting and Audit Reform Program (NAARP). The Program aims to bring the national accounting and audit system in compliance with international standards and requirements of a market economy.

According to NAARP, new national accounting standards harmonized with international financial reporting standards (IFRS) will be introduced into pilot sectors of the economy beginning on 1 January 2013, with full transition for the rest of the economy as of 1 January 2014. The banking sector was required to fully transition to IFRS by 2011.

The measures underway to implement the National Accounting and Audit Reform Program include updating and developing the relevant regulatory framework; developing national accounting and financial reporting standards for both the private and public sectors; training specialists and professional accountants; and introducing best international practice through cooperation with leading financial institutions of the world. Based on an agreement formalized between the Turkmen Finance of Ministry and the IFRS Foundation in 2011, IFRS is currently being translated into the Turkmen language in order to facilitate its implementation in the country.

Following the approval of NAARP, a new Turkmenistan Accounting Law was adopted in 2010, while the country’s new Audit Law is currently under development.

Click for Turkmenistan country page.

Agenda for Capital Markets Advisory Committee meeting

17 Feb 2012

The Capital Markets Advisory Committee is meeting in London on 22 February 2012 with representatives of the IASB. The agenda for the meeting is set out below.

Capital Markets Advisory Committee meeting agenda
22 February 2012, London
Wednesday, 22 February 2012

Click for access to the full agenda and agenda papers (link to IASB website).

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.