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SEC plans for improved SOx 404 implementation

22 May 2006

The US Securities and Exchange Commission has announced a series of actions it intends to take to improve the implementation of the Section 404 internal control requirements of the Sarbanes-Oxley Act of 2002. Those actions include: Guidance for companies. The guidance would assist management in its performance of a top-down, risk-based assessment of internal control over financial reporting.

To ensure that this guidance is of help to non-accelerated filers and smaller public companies, the Commission intends that this future guidance will be scalable and responsive to their individual circumstances. The guidance will also be sensitive to the fact that many companies have already invested substantial resources to establish and document programs and procedures to perform their assessments over the last few years. The form of the guidance has yet to be determined. Public comment will be invited.
  • Revisions to PCAOB Auditing Standard No. 2. AS 2 addresses An Audit of Internal Control Over Financial Reporting Performed in Conjunction with an Audit of Financial Statements.
  • SEC oversight of PCAOB's programme for inspecting auditing firms.
  • Extension of compliance for non-accelerated filers. To permit non-accelerated filers and their auditors to have the benefit of the management guidance that the SEC intends to issue, and to have the opportunity to evaluate and implement the revisions that the PCAOB plans to make to AS No. 2, the Commission expects to issue a short postponement of the effective date of the Commission's rules implementing Section 404 for non-accelerated filers. All filers would be expected to comply with the management assessment of internal controls required by Section 404(a) of Sarbanes-Oxley for fiscal years beginning on or after Dec. 16, 2006.
  • Click for (PDF 82k).
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    New Global Offerings Services newsletter

    21 May 2006

    We have posted the (PDF 179k).

    Global Offerings Services is a global team of Deloitte practitioners assisting non-US companies and non-US practice office engagement teams in applying US and International accounting standards (that is, US GAAP and IFRSs) and in complying with the SEC's financial reporting rules. Past GOs Newsletters are Here.
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    Updated EFRAG endorsement status report

    21 May 2006

    The European Financial Reporting Advisory Group has updated its report showing the status of endorsement, under the EU Accounting Regulation, of each IFRS, including standards, interpretations, and amendments.

    Click to download the Endorsement Status as of 18 May 2006 (PDF 28k). Currently, the following IASB pronouncements have not yet been endorsed for use in Europe:
    • IFRIC 8 Scope of IFRS 2
    • IFRIC 9 Reassessment of Embedded Derivatives
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    ASBJ and FASB convergence meeting

    21 May 2006

    Representatives of the Accounting Standards Board of Japan (ASBJ) and the US Financial Accounting Standards Board (FASB) met in Tokyo on 18 and 19 May 2006 in the "first of what is expected to be periodic meetings to enhance dialogue between the two Boards in their pursuit of international convergence".

    Click for (PDF 88k).
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    IASC Foundation begins search for new chairman

    21 May 2006

    Tommaso Padoa-Schioppa, chairman of the IASC Foundation (IASCF), will step down from that role to become the Italian finance minister in the new government of Romano Prodi.

    Mr. Padoa-Schioppa, who was a founding member of the Executive Board of the European Central Bank, became chairman of the IASCF on 1 January 2006. The IASCF is the oversight body for the IASB. The 22 IASCF trustees are charged with naming the new IASCF chairman.
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    Commissioner McCreevy speaks about IFRSs in China

    20 May 2006

    In our news story of 16 May 2006, we reported that EU Internal Market Commissioner Charlie McCreevy is making a six-day visit to China aimed at advancing the EU's international regulatory agenda.

    He has made three speeches relating to capital markets and accounting and auditing:
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    IFAC PIOB's first annual report

    19 May 2006

    IFAC's Public Interest Oversight Board (PIOB) has issued its first public report, which highlights its activities during its first year of operation.

    It includes comments on its oversight of IFAC's ethical, auditing, and education standard-setting activities. The report, along with other information, may be downloaded from the PIOB's new website at The PIOB was formally established in February 2005 to oversee IFAC's auditing and assurance, ethics, and education standard-setting activities as well as its Member Body Compliance Program. This last activity is designed to encourage member bodies to adopt international standards and to implement quality assurance and investigation and discipline programs. A Monitoring Group comprised of international financial regulators oversees the work of the PIOB. Click to download the First Public PIOB Report (PDF 195k).
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    Deloitte letter on vesting amendments to IFRS 2

    19 May 2006

    We have posted the Deloitte letter of comments to the IASB on the (PDF 42k).

    Our overall view:

    We do not believe the Board should issue the proposed amendments at this time. We refer you to our comment letter responding to D11 Changes in Contributions to Employee Share Purchase Plans dated 1 March 2005. The proposed amendments would codify in the standard the same requirements as the IFRIC were proposing as an interpretation. We believe that the Board should undertake further research and consider alternative approaches that may be better suited to address the wide range of schemes that exist in practice today. We have included in our comment letter a proposed approach that we believe should be considered by the Board prior to issuing a final amendment (as discussed in the responses below).

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    Prof. Thomas Linsmeier appointed to FASB

    17 May 2006

    Professor Thomas J.

    Linsmeier has been appointed to the US Financial Accounting Standards Board (FASB). Mr. Linsmeier is the Russell E. Palmer Endowed Professor and Chairman of the Department of Accounting and Information Systems in the Eli Broad College of Business at Michigan State University. His term begins on 1 July 2006 and runs through 30 June 2011. He succeeds current FASB member Katherine Schipper, whose term will expire on 30 June 2006. Click for (PDF 53k).
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    EU-China cooperation in accounting

    16 May 2006

    EU Internal Market Commissioner Charlie McCreevy has begun a six day visit to China aimed at advancing the EU's international regulatory agenda.

    The Commissioner will visit Beijing, Shanghai and Hong Kong, where he will have discussions with the Chinese authorities and business leaders on macroeconomic and financial regulatory issues, public procurement, accounting, and intellectual property rights. Among Commissioner McCreevy's meetings is one with Vice Minister of Finance Wang Jun on EU-China Cooperation in Accounting. Click for (PDF 102k).

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