Click to Download the EFRAG Letter (PDF 96k). An excerpt:

We have to express disappointment with the proposals for change put forward in the consultation paper. It appears that the Trustees have ignored many European concerns even though numerous proposals for change were put forward by many different European organisations. Many organisations proposed finding means to have European constituents more involved in one way or another, but the proposals seem to us to be more in the direction of diluting the European involvement. It is all the more disappointing, therefore, that the proposals contained within the Constitutional Review document are so marginal in their response to the ideas put forward during the preceding consultative round, including the open meetings held during the course of 2004. The key issues we see as needing improvement are: Accountability and public oversight of the Trustees and the Board. The governance structure. The composition of the Trustees and the Board.

Entities should, of course, adopt an approach that is most appropriate to their circumstances and that provides sufficient detail to allow users to understand the significant impacts on the financial statements. Click to download (PDF 657k).

As with the English language version, the 67-page guide in Chinese includes information about:

• IASB structure and contact details.
• Use of IFRSs around the world, including updates on Europe, Asia, USA, and Canada.
• Summaries of each IASB Standard (through IFRS 6) and Interpretation (through IFRIC 5), as well as the Framework and the Preface to IFRSs.
• Background and tentative decisions on all current IASB projects.
• An IASC and IASB chronology.

The English version can be found on our IFRS Publications Page.

The current scope of topics under consideration for convergence is limited in that it will not include:

• standards issued after 31 March 2004 – IFRSs 5 and 6;
• standards issued on or before 31 March 2004 that are "recently developed" – which would include the 14 Improved IASs issued by the IASB in December 2003 as well as IFRSs 2, 3, and 4;
• standards under review or intended to be reviewed in the joint projects between the IASB and the US Financial Accounting Standards Board (FASB) – which currently include IAS 12, IAS 14, IAS 19, IAS 20, IAS 37, and IAS 39;
• standards that are divergent owing to differences in the respective conceptual frameworks or basic philosophies – the ASBJ includes their new standard retaining pooling of interests accounting for business combinations in this category;
• standards whose requirements are subject to legal restrictions or those currently considered inapplicable in Japan.

Nor will differences in the two boards' conceptual frameworks be considered for convergence. See our news story of 21 January 2005 for more information.

The report is based on a study of recent financial scandals involving large, global companies. IOSCO's goal is to identify possible weaknesses to the international financial system and decide how those weaknesses can be addressed. The report identifies seven separate areas that have figured prominently in many recent high-profile financial scandals:

• Corporate governance, including the role of independent directors, protection of minority shareholders, auditor oversight, and conflicts of interest presented by related-party transactions;
• Auditors and audit standards, including auditor independence and auditor rotation;
• Issuer disclosure requirements, including management's discussion and analysis of material events and factors likely to have an impact on the issuer;
• Bond market regulation and transparency, including issuer disclosures and the transparency of bond market price-setting mechanisms;
• The role and obligations of market intermediaries;
• The use of complex corporate structures and special purpose entities; and,
• The analytical integrity and independence of private-sector information analysts.

For each of the seven areas, the report discusses what issues recent financial scandals have raised, and whether any international standards or principles currently exist to remedy or address the issues identified. IOSCO's stated priorities include promoting implementation of the international standards and principles already developed and facilitating cross-border enforcement cooperation so that existing securities laws and regulations can be fully enforced. Click to download:

• IOSCO Report (PDF 343k)
• IOSCO Press Release (PDF 237k)

The Draft Interpretations are:

• D12 Service Concession Arrangements - Determining the Accounting Model
• D13 Service Concession Arrangements - the Financial Asset Model
• D14 Service Concession Arrangements - the Intangible Asset Model

Service concession arrangements are arrangements whereby a government or other body grants contracts for the supply of public services, such as roads, energy distribution, prisons, or hospitals, to private operators.

D12 proposes that if, as often happens, the grantor continues to control how the infrastructure is used both during and after the concession, the operator should not recognise that infrastructure as its own property, plant, and equipment. The operator may construct or acquire such infrastructure for the purpose of the concession. If it does so, it should account for having provided construction services to the grantor under a construction contract, and recognise as an asset the rights it receives in exchange from the grantor.

D13 and D14 provide guidance on how the operator should apply relevant IFRSs when it recognises a financial or intangible asset respectively. Both address the recognition and measurement of contract revenue and costs, and service concession assets and obligations (such as obligations to repair and maintain infrastructure).

The three Interpretations are proposed to be effective for annual periods beginning on or after 1 January 2006. Early adoption would be permitted.

Comments are requested by 3 May 2005. Click for IASB Press Release (PDF 61k). Download the draft Interpretations from IASB's Website.

 

Note that this is not the same Crowne Plaza Hotel as the 16 March fair value option meeting.

Section 404 requires a company to include in its annual reports a report by management on the company's internal control over financial reporting and an accompanying auditor's report. Under the latest extension, foreign private issuers filing annual reports on Form 20-F or 40-F, as well as non-accelerated filers, must begin to comply with the internal control requirements in their first financial year ending on or after 15 July 2006. This is a one-year extension from the previously established 15 July 2005 date. The SEC noted that one reason for the deferral for foreign issuers is that "many foreign companies are facing regulatory and reporting challenges in addition to internal control reporting as companies incorporated in a European Union member country are required to prepare their financial statements for 2005 in accordance with new International Financial Reporting Standards." Click for:

• (PDF 31k)
• (PDF 45k)

That globalisation is an important reason why global financial reporting standards are needed.

The draft is intended to set out a shared vision of the respective roles of national and regional standard-setters and of the IASB in working towards a single set of high quality, understandable, and enforceable global accounting standards. An earlier draft of the MoU was discussed at a meeting of world standard setters in September 2004. The IASB requests comments by 29 July 2005. The IASB intends to present a collation of the comments and a revised draft MoU at a meeting of world standard-setters in September 2005. Click to download:

• Draft Memorandum of Understanding (PDF 44k).
• IASB Transmittal Letter (PDF 8k).