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Guidance on implementing IFRS-based standards in China

21 Nov 2006

The Ministry of Finance of China has issued limited implementation guidance on 32 of the 38 Accounting Standards for Business Enterprises (ASBEs) that it adopted in February 2006, effective for 2007 financial reports of Chinese listed companies.

The table below has the complete list of the new ASBEs. The guidance covers ASBEs 1-14, 16-24, 27, 28, 30, 31, 33, 34, 35, 37, and 38. The MOF guidance is currently available only in Chinese to Download Zip File (4,009k ZIP). Alternatively, all of the ASBEs and guidance can be downloaded in Chinese from the official website of China Accounting Standards Committee

China's Accounting Standards for Business Enterprises

Basic Standard




Long-term equity investments


Investment properties


Fixed assets


Biological assets


Intangible assets


Exchange of non-monetary assets


Impairment of assets


Employee compensation


Enterprise annuity fund


Share-based payment


Debt restructurings






Construction contracts


Government grants


Borrowing costs


Income taxes


Foreign currency translation


Business combinations




Recognition and measurement of financial instruments


Transfer of financial assets




Direct insurance contracts


Re-insurance contracts


Extraction of petroleum and natural gas


Changes in accounting policies and estimates and correction of errors


Events occurring after the balance sheet date


Presentation of financial statements


Cash flow statements


Interim financial reporting


Consolidated financial statements


Earnings per share


Segment reporting


Related party disclosure


Presentation of financial instruments


First time adoption of Accounting Standards for Business Enterprises

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Our views on Conceptual Framework discussion paper

21 Nov 2006

We have submitted to the IASB Our Comments on the Discussion Paper (DP): Conceptual Framework–Objective and Qualitative Characteristics.

Although we agree with many of the provisions in the proposed framework, we have concerns about some of them, including the following:
  • Insufficient emphasis is given to stewardship as an objective of financial reporting. Our letter states:

    "Management, in addition to having the responsibility for allocation of the assets entrusted to it for the benefit of shareholders, also has an obligation to provide its shareholders with an account of what it has done with those assets. This account has to be a faithful and complete historic description of the entity's assets and liabilities at the beginning and end of the accounting period, coupled with management's explanation of how those balances changed during the period. Recognizing this broader meaning of 'stewardship' as one of the primary objectives of financial reporting both supports all of the qualitative characteristics of financial reporting information proposed in the DP, and helps to align management's behaviour with the objectives of all of the entity's stakeholders. Such a stewardship objective will emphasize the role of financial reporting as a dialogue between management and the owners of the business."

  • While present and potential investors and creditors view cash flow information as essential for their decision-making, they also value other information not specifically tied to cash flows. For example, many non-cash transactions such as asset write-downs and share-based payments lend insight into management's stewardship and the impact of current economic factors on the entity's assets and liabilities. Other information such as sensitivity or trend analyses might prove equally useful;
  • Different information needs of different categories of users of financial reports should be set out in a hierarchy;
  • The DP focuses on financial reporting, rather than financial statements, but does not define financial reporting;
  • Reliability should be regarded as an essential attribute of financial information and as an additional and separate characteristic that should not be subsumed in the attributes of faithful representation and verifiability
  • 'Substance over form' should be identified as a component of representational faithfulness,
Click for:
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Proposed revisions to 'cost approach' valuation guidance

21 Nov 2006

The International Valuation Standards Committee has published Proposed Revisions to International Valuation Guidance Note 8 – The Cost Approach for Financial Reporting.

The proposed revisions are the result of requests for clarification and suggestions of minor improvements to the 2005 version of GN8. Comment deadline is 31 December 2006. The IVSC has also released an update of its work programme:

IVSC Work Programme

Eighth edition International Valuation Standards

To be published Q2 2007

Revised IVS 2 - Valuation Bases other than Market Value

Early publication on website Q1 2007

Revised IVA 2 - Valuation for Lending Purposes

Early publication on website Q1 2007

New IVA 3 - Valuation for Financial Reporting of Public Sector Assets

Early publication on website Q2 2007

New GN - Valuation of Historic Property

Early publication on website Q1 2007

Proposed Revisions to GN 8 - The Cost Approach for Financial Reporting

Consultation draft issued Nov 06

Proposed Revisions to GN 9 - Discounted Cash Flow Analysis

Consultation draft to be issued Q1 2007

The Valuation of Intangible Assets for IFRS Reporting Purposes

Exposure draft to be issued Q2 2007

Click for Full Report (PDF 193k).
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IAASB issues three exposure drafts

20 Nov 2006

The International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of the International Federation of Accountants (IFAC), has issued three exposure drafts of proposed International Standards on Auditing (ISAs) that follow its new clarity drafting conventions.

Key elements of those drafting conventions include basing the standards on objectives, as opposed to procedural considerations; using the word 'shall' to identify requirements that the professional accountant is expected to follow in the vast majority of engagements; eliminating the present tense to describe actions by the professional accountant; and structural improvements to enhance the overall readability and understandability of the standards. The three new EDs are:
  • ISA 320 (Revised and Redrafted), Materiality in Planning and Performing an Audit;
  • ISA 450 (Redrafted), Evaluation of Misstatements Identified during the Audit; and
  • ISA 260 (Revised and Redrafted), Communication with Those Charged with Governance.
Comment deadline is 15 February 2007. The exposure drafts may be viewed by going to The EDs remain posted until the final ISAs have been issued.
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New EU procedure for endorsing IFRSs

20 Nov 2006

A new step has been added to the procedure for endorsing IFRSs (including Interpretations) for use in Europe.

The European Commission will be required to submit its endorsement proposals to a Committee of the European Parliament, known as the Regulatory Procedure with Scrutiny Committee. That Committee will give its opinion on endorsement to the Commission within a time frame determined on a case by case basis. If the Committee agrees with the Commission's recommendation, the recommendation goes to the European Parliament and Council for approval, as at present. If, however, the Committee does not agree with the Commission's recommendation, the matter will go directly to the Council. If the Council supports the Commission's recommendation, the matter will go to Parliament for action. If the Council does not support the Commission's recommendation, the Commission will be asked to reconsider the matter and submit a new recommendation. Click for:
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SEC 2006 annual report references to IFRSs

20 Nov 2006

The Performance and Accountability Report of the US Securities and Exchange Commission for the year ended 30 September 2006 makes a number of references to IFRSs including the following progress report under the heading 'Improving Disclosure for Investors':

Global accounting standards. Last year, the SEC staff published a 'roadmap' of the milestones necessary to permit foreign private issuers to file financial statements prepared under International Financial Reporting Standards (IFRS), without reconciling them to U.S. generally accepted accounting principles. The roadmap involves, among other things, a detailed analysis of the faithfulness and consistency of the application, interpretation, and enforcement of IFRS in financial statements across companies and jurisdictions, and continued progress in the convergence work now being conducted by the International Accounting Standards Board and the Financial Accounting Standards Board. The SEC staff has been working with other regulators, including through IOSCO and the Committee of European Securities Regulators (CESR), to help reach some of these milestones. For example, the SEC staff and CESR finalized a work plan in 2006 to share information about IFRS implementation.
Click for Full Report (PDF 2,294k).
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Board agenda project pages updated

19 Nov 2006

We have updated the following agenda project pages to reflect the discussions and decisions at the International Accounting Standards Board's November 2006 meeting:

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EITF Snapshot for November 2006

18 Nov 2006

We have posted the latest edition of EITF Snapshot summarising the 16 November 2006 meeting of FASB's Emerging Issues Task Force.

EITF Snapshot, published by Deloitte & Touche LLP (USA), enables readers to identify relevant topics and to understand quickly the meeting's outcome. A related newsletter – EITF Roundup – is published immediately after the FASB's consideration of the tentative conclusions and consensuses reached, provides more in-depth information on each of the issues. Click for Snapshot (PDF 96k). Past issues of both of these publications can be downloaded Here.
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Notes from the November 2006 IASB meeting

18 Nov 2006

The International Accounting Standards Board held its November 2006 Board meeting at its offices, 30 Cannon Street, London, on Thursday 16 November 2006 and Friday 17 November 2006.

Click here to go to the Preliminary and Unofficial Notes of the November 2006 IASB Meeting taken by Deloitte observers.

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European discussion paper on the conceptual framework

17 Nov 2006

The European Financial Reporting Advisory Group (EFRAG) and the French accounting standard setter (Conseil National de la Comptabilite, or CNC) have jointly published the first Discussion Paper under the auspices of the Pro-active Accounting Activities in Europe (PAAinE).

The Discussion Paper is titled The Conceptual Framework: Starting from the Right Place? It elaborates on the following issues:
  • Purpose of the conceptual framework
  • Users of financial reporting
  • Entities within the scope of the Framework
  • The scope of financial reporting.
EFRAG and CNC invite comments, which are due by 18 March 2007. Click to Download the Discussion Paper PDF 873k).


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