ACCA has recommended that the British government not pursue that approach. The ACCA research report, A Conceptual Framework for the Taxable Income of Businesses, and How to Apply it under IFRS, by Professor Christopher Nobes of Reading University, examines the advantages and disadvantages of conforming tax practice with financial reporting practice and concludes that tax and financial reporting should have separate rules and, therefore, be disconnected. The full report may be downloaded from ACCA's Website (PDF 248k). Click for Press Release (PDF 22k).

We have updated the following Country Pagesto report recent accounting standards developments:

• Australia,
• China,
• Hong Kong,
• India,
• Japan,
• Philippines,
• Singapore,
• Taiwan.

We wrote:

In order to strengthen EFRAG, and achieve further recognition of EFRAG by all relevant constituencies, EFRAG should become the European experts group which: participates actively and effectively in the selection of an appropriate agenda for the IASB and IFRIC, working in partnership with those bodies; works closely in partnership with CESR and European enforcement agencies (e.g. review panels), for European expertise and experience relating to the accounting standards. In addition, the Supervisory Board should consider how to address the extensive need for implementation guidance arising as a result of more than 7,000 European companies moving to IAS in 2005. The harmonisation of accounting in Europe will not be achieved if various local standard-setters and regulators were to start issuing their own guidance and interpretations of IAS.

EFRAG (The European Financial Reporting Advisory Group) was formed in 2001 by a broad group of organisations representing the European accounting profession, preparers, users, and national standard-setters with the following goals: — to provide technical expertise to the European Commission concerning the use of IAS within the Europe, — to participate in IASB's standard setting process, and — to coordinate within the EU the development of views concerning international accounting standards.

IFRIC D3

IFRIC D3 would require arrangements that do not take the legal form of leases, but that have the substance of leases, to be accounted for in accordance with IAS 17 Leases.

The types of arrangements addressed include outsourcing arrangements; contracts to supply network capacity in the telecommunications industry; take-or-pay contracts (in which purchasers must make specified payments regardless of whether they take delivery of the contracted products or services; and service concession arrangements in which a supplier (usually a private entity) provides the use of an item of infrastructure to a purchaser (usually a government).

The draft provides guidance on determining whether an arrangement is, or contains, a lease for the purpose of applying IAS 17, but it does not provide guidance on whether such leases should be classified as finance or operating leases.

IFRIC D4

IFRIC D4 would provide guidance where entities contribute to funds established to reimburse their decommissioning, restoration, or rehabilitation obligations when the costs are incurred. Such funds may be established by a single contributor to fund its own decommissioning obligations, or by multiple contributors to fund their joint decommissioning obligations.

IFRIC proposes that the contributor determine whether it has control, joint control, or significant influence over the fund by reference to the standards dealing with subsidiaries, joint ventures, associates and special purpose entities. If it does, the contributor should account for its interest in the fund in accordance with those standards. If this does not apply, and the fund does not relieve the contributor of its obligation to pay decommissioning costs, the contributor should recognise a separate asset (for rights to reimbursement from the fund) and liability (to pay decommissioning costs).

Copies may be downloaded from the IASB's Website. Comments are due by 19 March 2004.

 

ED 6 proposes to exempt companies engaged in exploring for and evaluating mineral resources from certain requirements of IFRSs and the IASB Framework. Those companies would be permitted to continue using, under IFRS, the accounting policies for recognising and measuring assets arising from mineral exploration and evaluation activities that were used in their most recent annual financial statements. A company that elects to use its previous accounting policies should then change those policies if, and only if, the change makes the financial statements more relevant and reliable.

In addition, ED 6 proposes indicators to be considered when identifying whether exploration and evaluation assets might be impaired. It also proposes a "cash generating unit for exploration and evaluation assets" under IAS 36 Impairment of Assets.

The proposals would be effective for annual periods beginning on or after 1 January 2005. That is, the final IFRS would be followed by European and other companies that adopt IFRS in 2005. ED 6 may be downloaded from the IASB's Website. Comment deadline is 16 April 2004. Click: Press Release (PDF 32k). Summary of ED 6.

 

The agenda:

AGENDA OF THE IASB MEETING 20-23 JANUARY 2004 Business Combinations Phase I Financial Instruments – discussion of comments on the exposure draft on macro hedging IFRIC Matters Insurance Contracts Phase I – discussion of comments on ED 5 Leasing Post-Employment Benefits Revenue Recognition Short-term Convergence – discussion of comments on ED 4 on asset disposals and discontinued operations

We have posted the January 2004 editions of our quarterly newsletter IAS Plus:

• (PDF 230k)
• (PDF 269k)

The United Kingdom edition will be published soon.

So far we have updated the summaries of

• IAS 1,
• IAS 2,
• IAS 10,
• IAS 15,
• IAS 16,
• IAS 17, and
• IAS 24,

That differs from 2002, when revenue recognition matters were the most common cause of restatements. Click for:

• Summary of the Report (PDF 24k, posted with the kind permission of Huron Consulting Group). The full report will be available in early February.
• Press Release (PDF 17k).

The Commission reported that 131 Directives (around 8.5% of Internal Market Directives) have still not been implemented into national law in every Member State, though the deadlines agreed by the Member States themselves when they adopted the Directives have passed (often by more than two years). The Regulation requiring all EU-listed companies to prepare their consolidated financial statements in accordance with International Financial Reporting Standards from 2005 is part of the Commission's Internal Market Strategy.