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Notes from day 2 of the February 2008 IASB meeting

21 Feb 2008

The International Accounting Standards Board held its February 2008 meeting in London on Tuesday to Thursday 19-21 February 2008. The meeting is open to public observation and is being webcast.

Click to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the Meeting.

 

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FASB webcast on IFRS convergence

21 Feb 2008

The US Financial Accounting Standards Board (FASB) will conduct the second in a series of periodic webcasts focusing on topics of importance to its constituents.

It is scheduled for Thursday 13 March 2008, 1:00 PM to 2:00 PM (EDT) and will focus on FASB's Accounting Standards Codification. Viewers will have the opportunity to email questions to panelists during the event. The webcast will be archived on the FASB website for access by the public.

FASB webcast on Accounting Standards Codification:

  • Title of Webcast: The Move to Codification of US GAAP
  • Date and Time: 13 March 2008, 1:00 PM to 2:00 PM (US EDT)
  • Panelists: Larry Smith, a member of the FASB, and Tom Hoey, project director for the FASB codification project. Jay Hanson, National Director of Accounting for McGladrey & Pullen, will moderate the program.
  • Topic: The panelists will discuss and demonstrate the use of the FASB Accounting Standards Codification. The Codification is an on-line research system that organises by topic all authoritative US GAAP. The Codification is in the verification phase, which means that it is not yet authoritative. During the verification phase, constituents are encouraged to use and provide feedback.
  • Email Notification Service: To subscribe to an email notification service for future FASB webcasts, send an email to Join-fasb-webcast@listserv.lists.fasb.org. (It is not necessary to include any additional information in the subject line or body of your email.)

 

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New IFRS e-Learning modules nearing completion

21 Feb 2008

Two new modules in Deloitte's IFRS e-Learning system are nearing completion.

They will cover:
  • IFRS 8 Operating Segments
  • IFRIC 12 Service Concession Arrangements
We expect to release them by the end of March 2008 (announced, of course, here on IAS Plus). Thirty-five modules are currently available for download by clicking on the light-bulb icon on our e-Learning Page.

 

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Deloitte UK study on half-yearly reporting

21 Feb 2008

A Deloitte & Touche (United Kingdom) study has found that many companies are failing to comply fully with new reporting requirements for half-yearly financial reports following the UK's introduction of the EU's Transparency Obligations Directive (TOD).

Deloitte's report, titled Half a story, considers the impact of the TOD, which introduced more detailed and extensive requirements for half-yearly financial reports, including compliance with IAS 34 and shorter reporting deadlines. The report also includes some comparisons with the findings of previous Deloitte studies of half-yearly reporting in 2002, 2004, and 2006.

The key findings of the report include:

  • Of 289 companies surveyed, 72 (25%) failed to provide a responsibility statement in their half-yearly reports. This is now a requirement for all listed companies;
  • The average length of the half yearly financial report has increased by 27%;
  • The risks and uncertainties disclosures, which focus on the second six months of the year, were handled well by 19 of 30 companies reviewed in detail. Only four companies referred to credit crunch issues, three in relatively general terms and only one in respect of indebtedness following a refinancing not apparently caused by credit market tightening;
  • Nine of these 30 companies (30%), did not comply with the requirements of IAS 34. This was mainly due to missing disclosures on segments, accounting policies and earnings per share; and
  • Only one of the 30 companies clearly followed all of the requirements in the DTR and IAS 34.
Click for:

 

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Notes from day 1 of the February 2008 IASB meeting

20 Feb 2008

The International Accounting Standards Board held its February 2008 meeting in London on Tuesday to Thursday 19-21 February 2008. The meeting is open to public observation and is being webcast.

Click to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the Meeting.

 

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CFA Institute urges better executive comp disclosures

20 Feb 2008

The CFA Institute Centre for Financial Market Integrity has published a study 'It Pays to Disclose: Bridging the Information Gap in Executive Compensation Disclosures in Asia' that finds that prevailing disclosure regulations and practices in Hong Kong, Singapore, and Japan "leave room for questionable pay arrangements to continue or escalate in the future, and potentially harm corporate value and investor confidence".

The study found that five factors "conspire to render Asian markets vulnerable to pay abuses":
  • lack of regulatory push,
  • inadequate information in financial reports,
  • little use of long-term incentive plans,
  • poor board oversight, and
  • lack of investor influence on companies' executive compensation.
The study (PDF 358k) calls for both voluntary corporate disclosures and stronger disclosure requirements. Press Release (PDF 47k).

 

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New ISA on audits of accounting estimates

19 Feb 2008

The International Auditing and Assurance Standards Board (IAASB) has issued International Standard on Auditing (ISA) 540 (Revised and Redrafted) Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures.

ISA 540 requires the auditor to focus attention on areas of higher risk, accounting judgement, and possible bias, thereby assisting the auditor to form appropriate conclusions about the reasonableness of estimates in the context of an entity's financial reporting framework. The ISA provides expanded guidance on auditing fair value accounting estimates, including audit considerations relating to the proper application of the requirements of the financial reporting framework relevant to such estimates and the use of models in valuations. ISA 540 is effective for audits of financial periods commencing on or after 15 December 2009. The IAASB has also decided to establish a Task Force to consider how best to approach the development of possible further fair value auditing guidance. Click for Press Release (PDF 65k).

 

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2007 IFRS compliance questionnaire in Spanish

19 Feb 2008

Deloitte & Touche Ltda (Colombia) has published Cuestionario cumplimiento NIIF 2007 — 2007 IFRS Compliance Questionnaire in Spanish.

It is a direct Spanish translation of the English version. The questionnaire summarises the recognition and measurement requirements in IFRSs issued on or before 31 August 2007. The items in this questionnaire are referenced to the applicable sections of the IFRSs. Please bear in mind that IAS 8.30 requires disclosures regarding Standards and Interpretations issued but not yet effective when the financial statements are issued. Therefore, in addition to the contents of the questionnaire, preparers will need to consider any Standards and Interpretations issued between 1 September 2007 and the date of issue of their 2007 financial statements.
Click to view Cuestionario cumplimiento NIIF 2007 (PDF 2,322k). You will find a link to this and related publications on our Model IFRS Financial Statements Page.

 

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Classification of expenditures in the cash flow statement

19 Feb 2008

We have written to express some disagreement with the basis for IFRIC's tentative decision not to interpet IAS 7 Statement of Cash Flows regarding the classification of certain expenditures as operating or investing.

We disagree with IFRIC's conclusion that the issue could be resolved by referring it to the Board with the recommendation that IAS 7 should be amended to state that only expenditures resulting in the recognition of an asset qualify for classification as 'cash flows from investing activities'. An excerpt from our letter:

We acknowledge that in many instances recognition of an asset is a good indicator for classifying the expenditure as investing cash flows. However, we believe requiring classification of all cash flows that do not result in asset recognition as operating cash flows has the potential to mislead users and possibly misrepresent the statement of cash flows. Furthermore, as a result of changes in IFRSs, if certain expenditures are recognised as an asset or no longer qualify for recognition, this will lead to changes in the allocation within the statement of cash flows without changing the economic substance of the underlying transactions.

Examples of expenditures generally made for investing purposes that, under the IFRIC's proposal, we believe would be classified as part of 'cash flows from operating activities' include:

  • Exploration expenditures where an entity has an accounting policy of non-capitalisation of such expenditures
  • Initial expenditures on development cost that do not qualify for recognition as an asset
  • Acquisition-related expenditures in a business combination that are expensed immediately under the revised version of IFRS 3 Business Combinations
Therefore, we propose amending the recommendation to the Board to clarify the wording in IAS 7 to explain that, in determining the classification of expenditures that do not qualify for asset recognition, judgement needs to be applied.

Click to Download the Deloitte Letter to IFRIC (PDF 104k).

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SEC launches 'Financial Explorer' data analysis tool

18 Feb 2008

The US Securities and Exchange Commission has launched software called Financial Explorer on the SEC website to help investors analyse the financial results of public companies.

Financial Explorer lets investors automatically generate financial ratios, graphs, and charts depicting important information from financial statements. Information including earnings, expenses, cash flows, assets, and liabilities can be analysed and compared across competing public companies. Financial Explorer uses financial information provided to the SEC as interactive data in eXtensible Business Reporting Language (XBRL). Click to Launch Financial Explorer. Here's the SEC Press Release (PDF 52k).

 

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