2012

IASB and SOCPA discuss IFRS adoption in Saudi Arabia

29 Oct 2012

Representatives of the International Accounting Standards Board (IASB) and the Saudi Organization of Certified Public Accountants (SOCPA) met on 24 October in London to discuss progress towards the adoption of International Financial Reporting Standards (IFRSs) in the Kingdom of Saudi Arabia. The meeting took place adjacent to the IASB’s World Standard-Setters conference held on 25 and 26 October in London.

Currently, all banks and insurance companies listed on the Saudi Stock Exchange must use IFRSs. All other listed companies in the Kingdom of Saudi Arabia, as well as unlisted companies, must follow accounting standards generally accepted in the Kingdom of Saudi Arabia as issued by the SOCPA.

Both parties expressed satisfaction with the discussion. The IASB was "extremely pleased to note the progress Saudi Arabia is making towards the adoption of IFRS" and the SOCPA called the support expressed by the IASB members "very encouraging".

Please click for IASB press release (link to IASB website).

India moves towards new 'tax accounting standards' on way to IFRS

29 Oct 2012

The Central Board of Direct Taxes (CBDT), a body within the Indian Ministry of Finance, has publicly called for comments on a report submitted by its Accounting Standards Committee (Committee) on which standards should be used for tax purposes in India in light of India's possible transition to IFRS. The report recommends the creation of 'Tax Accounting Standards' for computing taxable income, a development which may partially address some of the concerns around adopting IFRS in the Indian context.

The Committee which produced the report was constituted in December 2010 to provide advice on the appropriate accounting standards for tax purposes in India, and had issued an interim report in August 2011.  Previously, an earlier Committee report issued in 2003 in light of existing Indian accounting standards recommended  the use of those standards on an unmodified basis, along with consequential legislative amendments to the Act with an aim of preventing revenue leakage.

In February 2011, the Indian Ministry of Corporate Affairs (MCA) issued 35 Indian Accounting Standards (Ind-AS) which were converged with IFRS, and announced their 'phased implementation' once certain Indian tax and other issues were resolved.  To date, an implementation date of the new Ind-AS standards has not been announced.

The Committee report is therefore an important step in addressing the concerns around the use of IFRS in India, particularly where Ind-AS might otherwise also be used for tax purposes, and may be seen a bringing India a step closer to adopting IFRS (in the form of Ind-AS, which contains some modifications of IFRS principles).

The Committee report analyses various issues which may arise in notifying Accounting Standards under section 145 (1) of the Indian Income-tax Act, 1961.  These issues include:

  • Whether taxpayers would be required to maintain two sets of books of account i.e. one in accordance with the Accounting Standards issued by the Institute of Chartered Accountants in India (ICAI), and another in accordance with the Accounting Standards notified under the Act.  The report recommends standards notified under the Act should be made applicable only to the computation of taxable income (rather than a separate set of books) and be termed as “Tax Accounting Standards” (TAS)
  • Whether the TAS should be made applicable to all taxpayers or to a class of taxpayers having turnover / income above a certain threshold limit.  The Committee recommends that the TAS should be made applicable to all taxpayers
  • Resolutions of conflicts between the express provisions of the Act and the TAS.  The Committee recommends provisions of the Act should prevail over the TAS
  • Other matters.  The Committee recommends that any required transitional provisions should also be notified along with the TAS and that appropriate modification in the return of income be made.

The Committee's report also includes drafts of the Tax Accounting Standards themselves, which are based on accounting standards with modifications considered appropriate for tax accounting purposes.  For instance, the proposed TAS would measure gains and losses on certain foreign currency transactions on a realised basis, and prohibit the revaluation of property, plant and equipment for tax purposes.

The original mandate of the Committee included a requirement to suggest method of determining  the tax base (book profit) for the purpose of India's Minimum Alternative Tax (MAT) in case of companies migrating to IFRS in the initial year of adoption and thereafter.  The Committee report concludes that given the fluid and uncertain situation regarding the transition to Ind-AS, the Committee decided to primarily focus on the formulation of TAS harmonised with the provisions of the Act, and recommends that the status of the transition to Ind-AS should be carefully monitored.

The CDBT is requesting comments and suggestions on the final report be submitted by 26 November, 2012.

Click for (links to Indian Ministry of Finance website):

IVSC and IFAC renew their Memorandum of Understanding

26 Oct 2012

The International Valuation Standards Council (IVSC) and the International Federation of Accountants (IFAC) have renewed their Memorandum of Understanding (MoU), which will further strengthen the collaborative efforts of both organisations in areas of common interest.

Under the MoU, several areas of common interest identified are:

  • "For valuers and auditors to obtain a better mutual understanding of standards relevant to the role of both in relation to financial statements,
  • To promote the additional credibility and acceptability of valuations prepared in accordance with IVS."

The MoU will remain effective until 31 December 2015.

Click to view the IVSC press release (link to IVSC web site).

IASB tweaks its work plan

26 Oct 2012

The International Accounting Standards Board (IASB) has publicly released a slightly revised work plan making two minor changes to the previous version dated 19 October 2012. The updated plan drops the 'development of strategy' for the Agenda Consultation process and clarifies the next project milestone in the project on 'bearer biological assets' under IAS 41 will be an exposure draft rather than a discussion paper.

The IASB took the reference to the development of a strategy out because it implied that a strategy would be developed over the next six months while this work has already been completed and most of it discussed in public. The details of the strategy for the next three years will be included in the feedback statement on the agenda consultation.

The clarification in relation to the IAS 41 project is consistent with the IASB's discussions at the September 2012 meeting where it was decided that a discussion paper is not required due to the existing research that had already been undertaken in the area.

Click for IASB work plan as of 25 October 2012 (link to IASB website). We have updated our project pages to reflect the updated work plan and other known developments.

Meeting documentation pack for the WSS meeting

25 Oct 2012

The IASB has posted to its website a 'meeting documentation pack' for the the annual World Standard Setters (WSS) meeting, which is currently being hosted by the IASB in London (starting today). The pack contains the detailed agenda with speakers' lists, all slides that will be shown and all agenda papers.

The WSS meeting offers a forum for the national standard setters organised in the International Forum of Accounting Standard Setters (IFASS) to exchange views with the IASB. A meeting of the IFASS has just been held in Zurich (22-23 October).

Of special interest at this meeting is the question how the IASB will work together with the national standard setters in the new Accounting Standards Forum that is to be up set to formalise the IASB's co-operation with national standard setters.

Please click for downloading the meeting pack from the IASB's website.

Summary of the October 2012 DPOC meeting

24 Oct 2012

The IASB has posted to its website a summary of the 10 October 2012 Due Process Oversight Committee (DPOC) meeting.

The DPOC is responsible for approving due process and overseeing the IASB’s compliance with due process, and reviewing the Trustees’ fulfilment of their oversight function in accordance with the Constitution of the IFRS Foundation.

Please click for a summary of the meeting (link to IASB website).

IIRC announces 'integrated reporting examples database'

24 Oct 2012

The International Integrated Reporting Council (IIRC) has launched an 'Integrated Reporting Emerging Practice Examples Database', which contains integrated reporting examples from businesses around the world.

The database brings together extracts of reports which illustrate emerging practices in the integrated reporting principles and content elements. The examples have been chosen from publicly available reports, including those produced by the IIRC’s Pilot Programme organisations.

Each example is accompanied by a short description of relevant features aligned with the international integrated reporting framework being developed by the IIRC. The IIRC has indicated the examples database will continue to be developed as integrated reporting evolves.

Click for (links to IIRC website):

IFRS Advisory Council membership update

23 Oct 2012

The Trustees of the IFRS Foundation have announced the appointments of six new members to the IFRS Advisory Council.

The new Advisory Council members are:

  1. Mr Gavin Francis, Deputy Group Chief Accounting Officer, HSBC Holdings plc (representing the Institute of International Finance)
  2. Mr Ernesto López Mozo, Chief Financial Officer, Ferrovial S.A
  3. Mr Ricardo Piña Gutierrez, General Director of Market Supervision, Comision Nacional Bancaria y de Valores, Mexico
  4. Dr. Ghiath Shabsigh, Assistant Director, Monetary and Capital Markets Department, International Monetary Fund
  5. Ms Zinga Venner, Manager of the Financial Reporting and Analysis Unit, World Bank
  6. Mr René van Wyk, Head of Bank Supervision and Registrar of Banks, South African Reserve Bank (representing the Basel Committee on Banking Supervision)

The new members will replace retiring members Simon Bradbury, Judith Downes, Patrice Marteau, Sylvie Matherat, Kenneth Sullivan and Will Widdowson as of 1 January 2013.

In addition, Dr. Christoph Hütten has been appointed as Vice-Chairman of the Advisory Council, replacing Patrice Marteau.

In accordance with the IFRS Foundation Constitution, Advisory Council members are appointed for an initial term of three years and, depending upon the need to maintain a proper balance and for continuity, may be asked to remain for a further period of up to three years. A maximum period of service of six years is permitted.

Click for:

Notes from the October 2012 IFRS Advisory Council meeting

23 Oct 2012

The IFRS Advisory Council meeting was held in London on 22-23 October 2012. We have posted the Deloitte observer notes from the meeting.

Some of the highlights from the meeting include discussions on:

  • the preliminary proposal to establish an Accounting Standards Forum
  • rate-regulated activities and how the IFRS should reflect the effects of rate regulation
  • US SEC representative's comments regarding the current situation the SEC is in regarding the adoption of IFRSs in the US
  • the consistent application of IFRSs and whether the IASB current policy is sufficient

Click to access the preliminary and unofficial notes taken by Deloitte observers for the entire meeting.

IASB podcast on insurance contracts

23 Oct 2012

The IASB has made available a podcast on the current state of debate in the IASB/FASB joint project on insurance contracts. The podcast, by Darrel Scott (IASB member) and Andrea Pryde (Technical Principal) report on developments in the project following the October 2012 joint IASB/FASB meeting.

This podcast focuses on the presentation of premiums and claims in the statement of comprehensive income (the ‘earned premium approach’), participating contracts, transitional requirements and time value of money in premium allocation approach.

To listen to the podcast, please click here (mp3, 14.3 MB, link to IASB website).

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