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Enforcement of IFRS in Europe

17 Jul 2003

In a presentation on How Accountants Fit in Creating a Single Capital Market (PDF 44k) delivered at the annual meeting of the Institute of Chartered Accountants in England and Wales, Michel Petite, the EC's Director-General of Legal Service, reviewed the issues that the EU is facing in ensuring rigorous enforcement of IFRS throughout Europe, including the 10 new countries that will join the EU on 1 May 2004. Financial reporting standards require that all the members of the Enlarged EU have in place the appropriate institutional oversight for their enforcement.

But the current structure of enforcement varies widely between member states. . . . In some member states, securities regulators are the accounting enforcers (like in France and Italy); in others, that function is exercised by a review panel (like in the UK with the Financial Reporting Review Panel); in others stock exchanges have some responsibility in this respect.
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Adoption of IAS 32 and 39 may be delayed in Europe

16 Jul 2003

Following discussion of measures for implementing the EU IAS Regulation 1606/2002, the Council of Finance Ministers (ECOFIN) issued a public announcement suggesting that IAS 32 and IAS 39 might not be adopted immediately in Europe: .

Following discussion of measures for implementing the EU IAS Regulation 1606/2002, the Council of Finance Ministers (ECOFIN) issued a public announcement suggesting that IAS 32 and IAS 39 might not be adopted immediately in Europe:

The Council asks the Commission to request the IASB to continue its dialogue with representatives of European industries in order to find a satisfactory and timely solution for the revised IAS 32 and 39 in view of their envisaged application.... The Council agrees with the Commission regarding the importance of an immediate adoption of all existing IAS, with IAS 32 and 39 as soon as possible thereafter. The adoption of future standards must respect the quality criteria set out in the IAS Regulation and be conducive to the European public good.

Under Regulation 1606/2002, an Accounting Regulatory Committee appointed by the EC must endorse IASB standards for use in Europe. The ARC meets today (16 July 2003). Click for Full Text of ECOFIN Announcement (PDF 207k. The IAS discussion is on pages 14 and 15.)
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FASB standards are now available on line without charge

16 Jul 2003

The US Financial Accounting Standards Board has made the full text of all of its Statements of Financial Accounting Standards issued since the FASB's inception in 1973 available on its website in PDF format without charge for personal, non-commercial purposes.

Each Statement is accompanied by a status page and (in most cases) a summary. The Statements are presented as originally issued – without shading to indicate amendments made by subsequent pronouncements. Statements that are completely superseded are so identified.
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European Commission debates IFRS today and tomorrow

15 Jul 2003

The recognition of IFRS for financial reporting by listed companies in Europe will be discussed by two key European Commission groups that are meeting in Brussels over the next several days – the EU Council of Finance Ministers and the EU Accounting Regulatory Committee: At their meeting on 15 and 16 July, the EU Council of Finance Ministers (ECOFIN) will discuss implementation measures for the IAS Regulation 1606/2002 adopted by the European Union in June 2002. The Background Paper (PDF 159k) notes that the Council will have an exchange of views on the implementation of Regulation 1606/2002 at the request of the French delegation.

France has recently circulated a paper setting out what it considers to be problematic issues with regard to IAS 32 and 39. A press conference will be held following the ECOFIN meeting.
  • The second meeting this week will be that of the EC's Accounting Regulatory Committee (ARC), which is charged under the IAS Regulation with "endorsing" IFRS for use in Europe. The ARC has already met several times and meets again on 16 July. While it has not yet made any final implementation decisions on IASB standards, the ECOFIN paper notes that "important issues have been discussed, for example the necessary high quality of translation of all IAS into all EU languages and the question of the quality of IAS 32 and 39 in their current form (which is a topic of interest, especially for banks and insurance companies)".
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    DTT Australian discussion paper on first-time adoption

    14 Jul 2003

    The Australian Accounting Standards Board has embarked on a program to expose and then adopt, over the next 12 months, over 30 Australian Accounting Standards that are intended to be converged with the equivalent IFRS.

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    Seven national accounting standards summaries updated

    11 Jul 2003

    We have updated our summaries of accounting standards activity for the following Asia-Pacific countries: Australia, China, Hong Kong, Japan, Malaysia, New Zealand, and Singapore. .

    We have updated our summaries of accounting standards activity for the following Asia-Pacific countries:

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    We comment on IFRIC D1 on emission rights

    11 Jul 2003

    Deloitte Touche Tohmatsu has submitted a on IFRIC Draft Interpretation D1, Emission Rights (PDF 59k).

    We agree with the general conclusions in the draft Interpretation, particularly that emission rights are intangible assets and not financial assets; receipt of the emission right is a government grant; and emission rights received can not be offset against the liability caused by emitting pollutants. However, as regards the accounting for government grants arising from emission trading schemes, we express some concerns:

    We have concerns as to the effects this interpretation may have on the accounting for government grants not within the scope of this Interpretation. Specifically, the prohibition of the allowed alternatives in IAS 20 because "this would not be a faithful representation of the resources that the entity controls" could be interpreted as a removal of this option from IAS 20. That is, when would an understatement of the assets received as a result of the allowed alternative be a faithful representation? This does highlight an issue with respect to IAS 20, but the issue is not particular to emission rights and should be considered at a wider level. If it is concluded that the options in IAS 20 undermine the quality of financial information reported, IAS 20 should be amended.

    The conclusion by the IFRIC (as directed by the IASB) to prohibit options in a Standard creates confusion as to the role of the IFRIC. We understand the mandate of the IFRIC allows it to set new standards and interpret existing standards. However, this decision apparently allows (and encourages) the IFRIC to take on its own improvements project – a result we do not support.

    We also understand the IASB has two projects (IAS 20 and IAS 38) that could, when finalised, potentially amend the requirements of this Interpretation. As a general matter, we question whether the IFRIC should interpret a Standard the IASB intends to replace or withdraw in the near term.

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    Views from SEC people on international issues

    10 Jul 2003

    Three recent presentations by representatives of the US SEC – one by an SEC Commissioner and two by the Acting Director of the SEC's Office of International Affairs – focus on international issues, particularly international concerns about accounting reforms and regulation in the US.

    You can view or download these presentations from the SEC's website:

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    IFAC publishes its 2002 annual report

    10 Jul 2003

    The International Federation of Accountants (IFAC) has published its 2002 Annual Report (PDF 597k).

    Interestingly, in previous years, IFAC had prepared its financial statements in accordance with IFRS. However, IFAC has now determined that preparation in accordance with International Public Sector Accounting Standards is more appropriate due to the nature of the organisation. Their 2002 report noted: "There has been no substantive difference in the recognition and measurement of amounts included in IFAC's financial statements resulting from the change of standards applied. However, as a result of some changes on the face of the financial statements, comparative figures have been adjusted to ensure they conform to the disclosure changes made."
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    Two exposure drafts expected soon

    10 Jul 2003

    The IASB is expected to publish two exposure drafts in the next several weeks: .

    The IASB is expected to publish two exposure drafts in the next several weeks:

    • Insurance Contracts – Phase I: This ED will propose guidance for applying existing IFRS to accounting for insurance contracts, addressing such issues as catastrophe and equalisation provisions, loss provisioning, discounting, derivatives and deposit components embedded in insurance contracts, offsetting, policy acquisition costs, accounting policies, and disclosure.
    • Disposal of Non-current Assets and Presentation of Discontinued Operations: This will be the first of several EDs coming out of the IFRS-US GAAP Convergence Project. This ED will address classification, presentation, and measurement of assets held for sale and discontinued operations. The goal is convergence of IFRS and FASB Statement 144.

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