Click for Link to SEC Release.

The agenda will include Revenue Recognition Concepts; Linkage of Assets and Liabilities (the linkage question arises when the accounting treatment for two or more transactions or contracts differs depending on whether they are accounted for separately or together); Consolidation and Special Purpose Entities; Business Combinations - Phase II; Convergence Topics; Insurance Contracts; and possibly Performance Reporting. The following week (28-29 October) the Board will meet with the chairs of its eight partner national standard-setters.

The US SEC is proposing that both domestic and foreign registrants include the following new disclosures in their Exchange Act filings:

• The number and names of the "financial experts" serving on the company's audit committee and that they are independent of management, as determined by the company's board of directors.
• Whether the company has adopted a code of ethics for its senior officers, or if not, why not; and any amendments to or waivers from the code.
• A company would be required to file, in its annual report, an internal control report of management stating: 1. management's responsibilities for establishing and maintaining adequate internal controls and procedures for financial reporting for the company, 2. management's conclusions about the effectiveness of the company's internal controls and procedures for financial reporting as of the end of the company's most recent fiscal year, and 3. that the company's registered public accountant has attested to, and reported on, management's evaluation of the company's internal controls and procedures for financial reporting. Click for SEC Release.

The IASB has postponed the issuance of an Exposure Draft on Activities of Financial Institutions to the second quarter of 2003, with a final Standard now planned for some time in 2004.

However, a number of property companies in Hong Kong have expressed significant concerns about IAS 40. The main issue of concern is reporting changes in the fair value of an investment property as part of profit or loss. Both the HKSA Council and its Financial Accounting Standards Committee concluded that the HKSA should await completion of IASB's Performance Reporting project before taking the matter up again.

 

Click to go to:

• Our Comment Letter Page.
• IAS 39 Amendments Page.

This issue covers stock options, convergence of FASB and IASB standards, special purpose entities, principles-based approach to standard setting, audits of investment companies, revenue recognition with multiple deliverables, accounting by state and local governments, and a summary of the September IASB meeting.

Pitt addressed the implications for Europe of the recent US accounting reform legislation [Sarbanes-Oxley Act]. Click to view the full text of Mr. Pitt's Remarks titled "A Single Capital Market in Europe: Challenges for Global Companies". Among other things, Mr. Pitt said:

Once the [new Public Company Accounting Oversight] Board is operational, it will need to determine a plan to consider and address issues regarding foreign firms. The Act provides that we, or the Board subject to our approval, may exempt any foreign public accounting firm from any provision of the Act or the rules promulgated under the Act. Once the Board is operational, we and it will explore the basis and need for exempting foreign audit firms. Ultimately, our decision must balance the fundamental regulatory objectives of Sarbanes-Oxley with our role as one of many regulators in the community of nations. We want to work closely with you in making these determinations and we will give real credence to the auditor oversight approaches other nations take.

The FASB also voted to authorise its staff to expand its research project on international convergence. With respect to the short-term project, the FASB established a goal of 31 December 2003 for issuance of a final Statement that would "eliminate or reduce many, if not all, of the differences to be addressed in that project".

The new US Public Company Accounting Reform and Investor Protection Act of 2002, approved by the US Congress in July 2002, permits the SEC to look to a private-sector accounting standard-setter, such as FASB, provided that the standard-setter "considers, in adopting accounting principles, ... the extent to which international convergence on high quality accounting standards is necessary or appropriate in the public interest and for the protection of investors."

In addition to updating those two pages to reflect decisions at the September IASB meeting, we have also updated our project pages on

• Business Combinations - Phase II,
• Convergence,
• Performance Reporting, and
• Share-Based Payment.