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IASC Foundation trustees will meet 26-27 October 2006

05 Oct 2006

The Trustees of the IASC Foundation, under which the IASB operates, will meet in Washington on 26 and 27 October 2006. The agenda of the public portion of the meeting (from 11:15am to 5:00pm on Thursday 26 October) is as follows: Opening/Approval of June Minutes Review of effectiveness of Trustee oversight IASC Foundation position on XBRL Report from IASB Chairman Report from IFRIC For more information: see the IASB Website. .

The Trustees of the IASC Foundation, under which the IASB operates, will meet in Washington on 26 and 27 October 2006. The agenda of the public portion of the meeting (from 11:15am to 5:00pm on Thursday 26 October) is as follows:

  • Opening/Approval of June Minutes
  • Review of effectiveness of Trustee oversight
  • IASC Foundation position on XBRL
  • Report from IASB Chairman
  • Report from IFRIC
For more information: see the IASB Website.
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IASB launches redesigned website

05 Oct 2006

The IASB has redesigned its Website www.iasb.org "to help stakeholders follow the development of those items that are on the IASB's work programme and make it easier for users of financial reports to participate in the development of International Financial Reporting Standards".

Click for Press Release (PDF 50k), which describes the new features. Because of the IASB's changes, we have removed from the IAS Plus home page our links to pages on the old IASB website that had comprehensive lists, with download links, for IASB Update, IFRIC Update, IASB meeting observer notes, IFRIC meeting observer notes, IASB Exposure Drafts, IFRIC Draft Interpretations, IASB Discussion Papers, and IASB Invitations to Comment. The Update newsletters are no longer available without subscription. The observer notes and meeting summaries and some of the comment documents are now available on a project by project basis. Go to the Work Plan Page, click on an individual project, and on that project page you will find links to meeting summaries and observer notes. There is also a page with links to Documents Open to Comment.
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Agenda for October 2006 IASB meeting

05 Oct 2006

The International Accounting Standards Board will hold its October 2006 Board meeting at its offices, 30 Cannon Street, London, on Monday through Friday 16-20 October 2006. Presented below is the preliminary agenda for the meeting.

The IASB will also hold a joint meeting with the US Financial Accounting Standards Board at FASB's offices in Norwalk, Connecticut USA on Monday and Tuesday, 23 and 24 October 2006. The joint meeting agenda has not yet been announced.

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16-20 October 2006, London

Monday 16 October 2006

Tuesday 17 October 2006 Wednesday 18 October 2006 Thursday 19 October 2006 Friday 20 October 2006
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Study of auditors' liability in the EU

04 Oct 2006

The European Commission has published an independent study on the economic impact of current EU rules on auditors' liability regimes and on insurance conditions in EU member states.

The study analyses the structure of the auditing market and its possible development in the future, describes the existing limitations in the insurance market for international audits, examines the economic needs for limiting auditors' liability, and compares several possible methods for limiting liability. Key conclusions of the study (not necessarily the views of the Commission) are:
  • The international market for statutory audits of large and very large companies is highly concentrated and dominated by the Big-4 networks. The likelihood of new entrants into this market is very limited in the coming years. Additionally, under the current circumstances, middle-tier firms are unlikely to become a major alternative if a Big-4 network fails.
  • The level of auditor liability insurance available for higher limits has fallen sharply in recent years. The remaining source of funds to face claims may essentially be the income of partners belonging to the same international network. Constantly large claims might therefore put at risk an entire network.
  • The failure of a network could lead to difficult consequences for the wider economy like a significant reduction in large company statutory audit capacity possibly creating serious problems for companies whose financial statements need to be audited.
  • A limitation on auditor liability would reduce this risk. While there exist a number of variants of statutory audit liability limitation, the diversity of circumstances in terms of both audits and company size is such that it is unlikely that a one-size-fits-all EU-wide approach is the most useful.
The Commission intends to issue a report based on this study before the end of 2006, and to invite comments. Click for:
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New IFACnet knowledge base for accountants in business

03 Oct 2006

The International Federation of Accountants (IFAC), in collaboration with 13 member organisations, has developed a web-based knowledge base for professional accountants in business, to be known as IFACnet – www.ifacnet.com.

The objective is "to provide one-stop access to leading-edge articles, good practice guidance, and tools and techniques for accountants employed in commerce, industry, the public sector, education, and the not-for-profit sector". IFACnet will include information on strategy, budgeting and planning, corporate governance, risk management, and professional development. IFACnet includes shared electronic resources from IFAC and the 13 participating organisations. Expansion is planned for 2007. There is no fee to use IFACnet, although certain search results may identify documents or publications available for purchase. Click for Press Release (PDF 92k).
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Public Interest Oversight Board first anniversary

02 Oct 2006

The Public Interest Oversight Board (PIOB), which oversees specified standard-setting activities of the International Federation of Accountants, has completed its first year of operation.

At its quarterly meeting late last month, the PIOB focused its discussions on key components of its independent oversight program:
  • review of nominations for appointment in 2007 to the standard-setting boards for international standards of audit, ethics and education for accountants;
  • consideration of the existing due process and working procedures applied by these boards in setting the above international standards; and
  • plans to monitor development of work plans and priorities of these boards for the next two years.
Click for:

 

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Update on corporate governance and accounting in EU

02 Oct 2006

Charlie McCreevy, the European Commissioner for Internal Market and Services, spoke about (PDF 73k) at the EU Business Leader Forum of the Association of Chartered Certified Accountants of Ireland in Dublin on 29 September 2006. An excerpt: I believe that we are standing on the threshold of a new era.

In accounting, for listed companies, the beginning of 2005 saw the introduction of the IAS Regulation and its requirement that around 8000 European listed companies have to prepare their consolidated financial statements using IFRS. Initial studies show that the implementation of IFRS has generally been successful. I am aware that accountants and auditors have done extensive work in order to achieve these results. At the same time, more work needs to be done on consistent application of the standards across Europe. Several parties have a role to play in this area. CESR, the Committee of European Securities Regulators, is playing a leading role: it has created several working groups in order to coordinate enforcement decisions in different jurisdictions. In the interest of transparency, there will also be a public database of decisions taken. Accountants and Auditors can help to improve consistent application, by improved communication among themselves. Commissioner McCreevy also addressed the IASB's project to develop an IFRS for Small and Medium-sized Entities (SMEs). An excerpt from his comments:

I have repeatedly stated that accounting for SMEs must be simplified and that the level of accounting complexity should be aligned with the nature of the activities of these companies. We have to identify SME's real needs and those of their financiers and use them as the basis for deciding on their future accounting requirements.

I am aware that this is a politically sensitive issue - so there will be extensive consultation with all stakeholders. We will listen very carefully to the concerns of SMEs before taking any decision.

As you know, the IASB intends to publish an exposure draft on accounting standards for SMEs. There will be a period of consultation afterwards. I have made it clear already that only simple, easy-to-apply standards will be acceptable to us. Nobody should assume that the standards will be automatically transposed into European law.

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IASB and Japan hold further convergence discussions

01 Oct 2006

On 28 and 29 September 2006 in London, the Accounting Standards Board of Japan (ASBJ) and the International Accounting Standards Board (IASB) held their fourth joint meeting towards the goal of achieving convergence between Japanese GAAP and International Financial Reporting Standards.

Click for Press Release (PDF 52k) that includes a list of topics discussed.
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FASB statement on penisons and other retirement plans

30 Sep 2006

The US Financial Accounting Standards Board has issued FASB Statement No.

158 Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans. FASB is conducting its retirement benefits project in phases. The goal of phase 1 is to make balance sheets more complete, transparent, and understandable. FAS 158 is intended to do that. Phase 2 is comprehensive reconsideration of accounting for pensions and other retirement plans. For an entity whose securities are traded in a public market, the recognition provisions of FAS 158 (see below) are effective for fiscal years ending after 15 December 2006. For non-public entities, the effective date is fiscal years ending after 15 June 2007. FAS 158 also requires that employers measure plan assets and benefit obligations as of the balance sheet date; this requrement takes effect for all entities for years ending after December 15, 2008. In July 2006, the IASB added to its agenda a two-phase Project on Post-Retirement Benefits including Pensions. The IASB plans to complete phase 1 in 2010 with an interim standard that would address presentation and disclosure, definition of defined benefit and defined contribution arrangements, accounting for cash balance plans (possibly), smoothing and deferral mechanisms, and treatment of settlements and curtailments. Click for (PDF 56k). FAS 158 is available on FASB's Website without charge.

Under FAS 158, an employer that is a business entity is required to:

  • Recognise in its statement of financial position the overfunded or underfunded status of a defined benefit postretirement plan measured as the difference between the fair value of plan assets and the benefit obligation. For a pension plan, the benefit obligation would be the projected benefit obligation; for any other postretirement benefit plan, such as a retiree health care plan, the benefit obligation would be the accumulated postretirement benefit obligation.
  • Recognise as a component of other comprehensive income, net of tax, the actuarial gains and losses and the prior service costs and credits that arise during the period but pursuant to FASB Statements No. 87 Employers' Accounting for Pensions and No. 106 Employers' Accounting for Postretirement Benefits Other Than Pensions, are not recognised as components of net periodic benefit cost. Amounts recognised in accumulated other comprehensive income would be adjusted as they are subsequently recognised as components of net periodic benefit cost pursuant to the recognition and amortisation provisions of Statements 87 and 106.
  • Any remaining transition amounts from initial adoption of FAS 87 and FAS 106 would also now be recognised in measuring a plan's funding status and in other comprehensive income.
For many entities with defined benefit plans, FAS 158 could result in increased liabilities, with corresponding reductions in equity.
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Deloitte comments on proposed amendments to IAS 23

30 Sep 2006

Deloitte has submitted to the IASB our comments on the (PDF 92k).

Over overall view:

We acknowledge that a general objective of the IASB's standard setting-agenda is the reduction of accounting alternatives in its standards. The ED could be seen in this light. However we see no evidence to support the IASB's conclusion that requiring capitalisation of interest is a higher quality answer.

Specifically we see no evidence in the Invitation to Comment or the ED's Basis for Conclusions that the IASB conducted an analysis of whether users are concerned about treating interest as an expense as opposed to including it as part of the acquisition cost of an asset and (if it did) what the conclusions of that analysis were. We are aware that users represented by the Chartered Financial Analyst Institute have consistently opposed capitalisation of borrowing costs. Indeed in BC 3, the proposals seem to be justified primarily on the basis that FAS 34 and IAS 23 are equally poor standards, We do not think that such a justification is in the spirit of convergence.

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