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Notes from the XVII World Congress of Accountants

14 Nov 2006

The World Congress of Accountants began yesterday in Istanbul, Turkey, and runs through 16 November 2006. There are 5,000 delegates from over 120 countries.

There are nearly 50 plenary and technical sessions. IAS Plus will include selected notes from each day of the Congress – generally those sessions related to financial reporting in the context of International Financial Reporting Standards. If you happen to be attending the Congress, please stop by and say hello at the Deloitte booth in the exhibition area.

Notes from the XVII World Congress of Accountants

Istanbul, Turkey, 13 November 2006

 Opening Ceremonies

The Seventeenth World Congress of Accountants was inaugurated this afternoon at a special plenary session at the Istanbul Convention and Exhibition Centre. Speeches of welcome were delivered by the Chairman of the Congress, Prof Dr Recep Pekdemir; the President of the Union of Chambers of Certified Public Accountants of Turkey (TURMOB), Mr Mehmet Timur; and the President of the Expert Accountants' Association of Turkey, Dr Masum Turker.

The outgoing President of the International Federation of Accountants, Graham Ward, reviewed his term of office and noted that the accountancy profession had used the opportunity of profound scrutiny following the financial scandals such as Enron and Parmalat to examine itself and undertake fundamental reforms that placed the worldwide profession on a solid foundation to be part of the solution to restoring public trust in financial markets. He stated that where there was a sound, vibrant, and independent accounting profession there was almost certainly an 'investment climate of trust'. He rounded out his address by reviewing the various measures that IFAC has put in place to ensure that the standards it promulgates (including International Standards on Auditing, standards for ethics in accounting firms, and education standards) were developed in as transparent an environment as possible.

The Congress has honoured by two senior members of the Turkish government: the Finance Minister and the Prime Minister, Recep Tayyip Erdogan. The Prime Minister noted that the upgrading of Turkey's financial systems and strengthening its financial infrastructure – including financial reporting – is a vital part of the country's ambition to join the European Union.

The working sessions of the Congress begin on 14 November, with a plenary session on the role of the accounting profession in generating economic growth in developing nations and three sets of topical workshops. IASB Chairman Sir David Tweedie will speak the 15 November plenary session on capital market stability worldwide and the accounting profession.
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IAS Plus Newsletters for October 2006

13 Nov 2006

The October 2006 IAS Plus Quarterly Newsletter has been published.

The newsletter reports on the 3rd quarter 2006 activities of the IASB, the IFRIC, and the IASC Foundation, and also on worldwide issues and events relating to international financial reporting. The Asia-Pacific edition has the same 28-page news content as the Global Edition plus 8 more pages of accounting standards updates for the Asia-Pacific region. You will find all Past IAS Plus Issues Here.
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ICAEW study on measurement in financial statements

11 Nov 2006

The Institute of Chartered Accountants in England and Wales has published a study on Measurement in Financial Reporting).

The report examines various measurement bases used in financial reporting currently and concludes that there is not one basis that is the best for all items in all circumstances. The report states:

'Making the case for change' puts the onus on showing that there is a problem that needs to be solved. In the context of financial reporting measurement this may be the case where:

  • people are confronted with a measurement problem and do not know how to deal with it;
  • worthwhile information that could be provided is not being provided;
  • information that is being provided is not worthwhile or even has negative effects - for example, because it is misleading.

It should not be assumed that every case of inconsistency in measurement is a problem that needs to be remedied. This report puts forward the following working hypotheses: that it may be appropriate in making decisions on measurement requirements:

  • to adopt a mixed approach to measurement for different items in accounts; and
  • to distinguish between different types of entity in accordance with their industry, ownership and governance structure, and size.

'Evaluation of options' should include the option to do nothing. Once the costs of potential changes (including the costs of making the change) have been taken into account and their likely benefits considered, it may become clear that the most sensible policy is to leave things as they are.
Click for Full Report (PDF 287k).
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Commissioner McCreevy's comments on IFRSs

11 Nov 2006

Charlie McCreevy, the European Commissioner for Internal Market and Services, spoke recently on Setting the Stage for Competitive EU Financial Services Markets before the Association of Corporate Treasurers in the UK.

Among other things, Commissioner McCreevy addressed IFRSs, the US SEC reconciliation requirement, and continued use of 'third country' GAAP by non-EU companies trading on EU regulated securities markets. Click to download Commissioner McCreevy's Remarks (PDF 79k). An excerpt:

In the field of accounting, significant steps forward have been taken. In April 2005, the Securities and Exchange Committee (SEC) staff proposed a 'roadmap' towards eliminating the need for reconciliation to US GAAP for European firms by 2009. This roadmap, together with a joint work plan recently published by CESR and the SEC on the consistent application of accounting standards, go a long way towards the goal of removing the reconciliation to US GAAP requirement for EU issuers in the US.

On this side of the Atlantic, the European Parliament and the European Securities Committee (ESC) have recently approved the Commission's proposal that will enable US GAAP, Japanese GAAP, Canadian GAAP and other third country accounting standards that are converging towards IFRS to continue to be used for another 2 years in the EU. This brings the deadline to 2009, and thus aligns the EU and US timetables on this issue. This will also give recognition to other countries' efforts to converge towards IFRS, thereby promoting use of the international standards globally.

In the slightly longer term, both sides agree on the need for continued progress on the technical convergence of IFRS and US GAAP. If we can succeed in abolishing accounting reconciliation requirements, we will greatly reduce costs for transatlantic listed companies and create a more open transatlantic capital market. The success of the accounting standards convergence project will be an acid test for the EU-US relationship in financial services because it will test the fundamental proposition of whether we can converge our regulatory systems or not.
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Historical data about the old IASC

11 Nov 2006

We have added a page of Historical Information about the International Accounting Standards Committee.

The IASC was the IASB's predecessor from 1973 to March 2001. The historical information about the IASC on that page is based on tables prepared for The International Accounting Standards Committee: A Political History, by Robert J Kirsch, forthcoming from CCH, part of Wolters Kluwer (UK) Ltd, publication expected 4th quarter 2006. We are grateful to the author and publisher for permission to post this information. The tables include:
  • IASC Voting Requirements
  • Dates and Locations of Meetings of the IASC Full Committee (1973-1977) and Board (1977-2000)
  • Duration of IASC Board Meetings Per Year
  • IASC Expenditure
  • IASC Revenue by Source as Per Cent of Total
  • Chairmen of the IASC
  • IASC Secretaries (to 1983) and Secretaries-General (from 1984)
  • Location and Size of IASC-IASB Offices
You will also find historical information about the IASC, including Exposure Drafts and final Standards and Interpretations issued year by year, on our Chronology Page.
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IASB posts latest draft of SME exposure draft

10 Nov 2006

The International Accounting Standards Board has posted the latest staff draft of an exposure draft of an International Financial Reporting Standard for Small and Medium-sized Entities (SMEs).

The draft is posted as two files:
  • The draft IFRS and a draft Invitation to Comment
  • Draft implementation guidance in the form of Illustrative Financial Statements and a Disclosure Checklist
The Board has not completed its consideration of the text, and further changes will be made to this draft before the Board publishes the exposure draft for public comment later this year. The draft is being made publicly available to keep interested parties up to date with progress on the project. The IASB does not request comments on this draft, and the staff will not be in a position to consider or respond to any comments. Here is the Link to the SME Page on IASB's Website where you can download the latest SME drafts.
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IFAC proposes guidance for companies' codes of conduct

10 Nov 2006

The International Federation of Accountants' (IFAC) Professional Accountants in Business (PAIB) Committee has published an exposure draft of guidance that would assist companies and their professional accountants in developing and implementing a code of conduct.

The proposed new good practice guidance, Defining and Developing an Effective Code of Conduct (PDF 139k), highlights the varied roles of professional accountants in business in driving and supporting organizational ethics and conducting ethics programs. It also provides practical guidance on the design and development of such codes. Comment deadline is 16 February 2007. Click for IFAC Press Release (PDF 82k).
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ASBJ and FASB hold convergence discussions

10 Nov 2006

The Accounting Standards Board of Japan and the US Financial Accounting Standards Board held the second meeting on global convergence of standards.

"Both Boards believe that these discussions are useful in promoting mutual understanding that will contribute to subsequent deliberations at their respective Boards and to their respective convergence projects with the IASB." A list of issues discussed is in the ASBJ Press Release (PDF 56k).
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Big-6 CEOs' vision for strengthening financial reporting

09 Nov 2006

The CEOs of the six major global networks of accounting and auditing firms, including Deloitte, have jointly published a 'vision statement' titled Global Capital Markets and the Global Economy "as the beginning of what we hope will be a robust dialogue about how global financial reporting and public company auditing procedures must adapt to better serve capital markets around the world".

The vision statement suggests development of "a new business reporting model to deliver relevant and reliable information in a timely way". Specific suggestions relating to financial reporting and auditing include the following:

Strengthening Financial Reporting and the Audit Function

Near-Term Measures:In the near term, the following 'convergence' processes must be completed to benefit the global financial markets and their stakeholders:

  • Complete the effort by the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) to harmonize differences between international and U.S. reporting standards, as currently envisioned. Complex rules must be resisted and withdrawn. Today's rules can produce financial statements that virtually no one understands. Standards need to be principles-based.
  • Launch and complete a similar process for the convergence of national audit standards, which should make use of the International Standards on Auditing (ISA) that already have been developed with the oversight of the Public Interest Oversight Board (PIOB) of the International Federation of Accountants (IFAC).
  • Similarly, minimize national differences in the oversight of auditors and enforcement of relevant audit standards, including rules relating to the way auditors conduct their activities. The recently established Independent Forum of International Audit Regulators (IFIAR) may be the appropriate body to pursue this objective. We are encouraged by recent statements from the U.S. audit regulator, the Public Company Accounting Oversight Board (PCAOB), that it intends to join and actively participate in IFIAR.

Consistency in business reporting standards, audit standards and enforcement of audit standards is necessary to support a global economy with the lowest cost of capital. Alignment of the accounting profession and the regulators around common objectives and application of principles-based standards will enable companies to produce consistent global information. A sensible global regulatory framework also will reduce barriers to growth and entry by other audit firms or networks in our profession, thus providing increased choice for auditing services.

Longer-Run Measures: Over the longer run, experts agree that the current systems of reporting and auditing company information will need to change — toward the public release of more non-financial information (some or much of which may be industry-specific) customized to the user, and accessed far more frequently than is currently done. It is time, therefore, for all global capital markets stakeholders involved to launch a process that will lead to the development of a new business reporting model, with a clear identification of the role of the independent audit and requirements dictated by that model.

Our firms pledge to work with issuers, investors, regulators and other market participants to develop this new model including ways of disseminating a broad array of company information to users in a manner more suited to the Internet age than the traditional quarterly and annual reports.
Click for Full Publication (PDF 1,961k).
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Agenda for November 2006 IASB meeting

08 Nov 2006

The International Accounting Standards Board will hold its November 2006 Board meeting at its offices, 30 Cannon Street, London, on Thursday 16 November 2006 and Friday 17 November 2006. Presented below is the preliminary agenda for the meeting.

The IASB will also meet with the Standards Advisory Council on 9 and 10 November 2006. We previously posted the Agenda for the SAC Meeting.

Board Meeting Agenda

16-17 November 2006, London

Thursday 16 November 2006

  • IFRIC X Service Concession Arrangements – Vote to approve an Interpretation
  • Annual improvements process - the following annual improvements projects will be recommended to and discussed by the Board:
    • Should IAS 1 Presentation of Financial Statements be amended to provide guidance on situations where the financial statements of an entity are based on, but not in full compliance with, IFRSs
    • How should the conflict between the requirements of IAS 1 Presentation of Financial Statements and IFRS 7 Financial Instruments: Disclosures regarding the presentation of finance costs be resolved?
    • Should the liability component of a convertible instrument with an obligation to deliver cash or other assets more than 12 months from the balance sheet date be classified as current or non-current?
  • Financial Instruments: Recognition and Measurement - Comprehensive Project
  • Conceptual Framework – Elements and Recognition
  • Fair Value Measurements – Discussion Paper

Friday 17 November 2006

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.