The objective of the convergence project is to reduce differences between the IASB's International Financial Reporting Standards (IFRSs) and US generally accepted accounting principles (GAAP).

The Exposure Draft proposes to require an entity to capitalise borrowing costs directly attributable to the acquisition, construction, or production of a qualifying asset as part of the cost of that asset.

The option of immediately recognising those borrowing costs as an expense, which is in the current version of IAS 23, would be removed.

Deadline for comments on the exposure draft is 29 September 2006. Click for IASB Press Release (PDF 57k). The exposure draft may be downloaded without charge from the IASB Website.

 

The International Accounting Standards Board is holding its May 2006 Board meeting at its offices in London on Tuesday through Friday 23-26 May 2006. You will find all of the preliminary and unofficial Notes Taken by Deloitte Observers here.

EFRAG identifies the following among its 'most notable accomplishments':

• Enhanced role through entering into the formal 'Working Arrangement' with the European Commission
• An official IASB invitation to meet regularly with IASB Board Members on the convergence project
• Setting up of the 'Pro-active Accounting Activities in Europe' project in partnership with national standard setters

The project will be led jointly by the Spanish Standard Setter (ICAC) and EFRAG. Click for EFRAG Announcement (PDF 48k).

The International Accounting Standards Board is holding its May 2006 Board meeting at its offices in London on Tuesday through Friday 23-26 May 2006. You will find all of the preliminary and unofficial Notes Taken by Deloitte Observers here.

Nearly 1,700 accounting firms are registered with the PCAOB, of which about 40% are non-US firms. The proposed rules implement Section 102(d) of the Sarbanes-Oxley Act of 2002, which provides that each registered accounting firm must submit an annual report to the Board, and may also be required to report more frequently. The reporting framework proposed by the PCAOB includes two types of reporting obligations:

• First, the proposal would require each registered firm to provide basic information once a year about the firm and the firm's issuer-related practice over the most recent 12-month period.
• Second, the proposal identifies certain events that, if they occur with respect to a registered firm, must be reported by the firm within 14 days.

In addition, the PCAOB has proposed rules that, in certain circumstances, would allow a successor firm to succeed to the registration status of a predecessor firm following a merger or other change in the registered firm's legal form. Click to download the (PDF 58k). The full text of the proposed rules may be downloaded from http://www.pcaobus.org/Rules/Rulemaking_Docket.aspx. Comments are due 24 July 2006.

The report includes sections on (1) Management Discussion and Analysis; (2) Performance; and (3) Financial Statements, including report of independent auditors, management's response to the audit opinion, and the Inspector General's summary of management challenges. A few items of interest:

• 74 new foreign private issuers registered US$250 million of securities in 2005 (compared to 63 and $146 million in 2004; 50 and $163 million in 2003; and 70 and $147 million in 2002)
• 'Milestones for international regulatory cooperation' include:
  • Eliminating GAAP reconciliation requirement for foreign issuers
  • Bilateral regulatory dialogues (China, Japan, EC, CESR)
  • IOSCO MOU on Enforcement Cooperation and Information Sharing
  • IOSCO initiatives on cross-border cases and financial fraud
• The SEC made 438 requests to foreign securities regulators for enforcement assistance and received 315 requests for assistance from foreign regulators
• 51% of the approximately 15,000 registered companies had their disclosures reviewed by the SEC (compared to 23% in 2003 and 22% in 2004)
• 37% of the approximately 35,000 registered investment companies (including mutual funds) had their disclosures reviewed by the SEC (compared to 10% in 2003 and 57% in 2004)
• 29% of SEC enforcement cases relate to financial reporting and disclosures
• 99% of enforcement cases were successfully resolved in favour of the SEC
• Number of on-line searches of SEC EDGAR database: 2002 96.9 million; 2003 141.5 million; 2004 288.9 million; 2005 379.0 million

We have posted the European Commission's (PDF 55k) adopting, for use in Europe, amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates – Net Investment in a Foreign Operation and IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies.

Among IFAC's most notable accomplishments for 2005 are:

• Strengthening of its standard-setting processes including establishment of the Public Interest Oversight Board (PIOB) and establishment and expansion of Consultative Advisory Groups for IFAC standard-setting boards
• Development of good practice guidance to help developing nations build accounting capacity.
• Release of an updated international Code of Ethics for Professional Accountants.
• Progress on developing a global electronic knowledge resource for professional accountants in business
• Successful implementation of Part 1 of the IFAC Member Body Compliance Program, which provides comprehensive information about the regulatory and standard-setting frameworks in countries around the world

The agenda for the IASB's May 2006 Board meeting (which we had reported in our News Story of 12 May 2006) has been expanded to include discussion of Accounting Standards for Small and Medium-sized Entities on Thursday morning 25 May 2006. The SME discussion will continue on Friday morning 26 May 2006.