News

GAA (Global Accounting Alliance) (lt green) Image

Global Accounting Alliance launches online journal

04 Jul 2008

The Global Accounting Alliance (GAA) has established a bi-monthly online journal called GAA Accounting.

The URL is www.gaaaccounting.com. Issue 1 of Volume 1 is now available. The journal will cover a range of topical issues in accounting and finance, focussing mainly on auditing, financial accounting, accounting education, management accounting, small business, social and environmental issues, and taxation.

Two of the four main articles in the first issue of GAA Accounting deal with IFRSs:

  • Auditor Liability
  • Significantly Stronger Corporate Governance under SOX: Survey
  • The collapse of the US sub-prime mortgage market: Understanding the impacts under IFRS
  • IFRS for SMEs

The GAA is a consortium of nine national professional accountancy bodies with a goal of promoting quality services, sharing information, and collaborating on important international issues, while operating in the interest of a quality accounting profession and the public interest. The GAA's website is www.globalaccountingalliance.com/. Current members are:

  • The American Institute of Certified Public Accountants (AICPA)
  • Institute of Chartered Accountants in Australia
  • Canadian Institute of Chartered Accountants (CICA)
  • Institute of Chartered Accountants in England and Wales (ICAEW)
  • Institute of Chartered Accountants in Ireland (ICAI)
  • Institute of Chartered Accountants of Scotland (ICAS)
  • New Zealand Institute of Chartered Accountants (NZICA)
  • Hong Kong Institute of Certified Public Accountants (HKICPA)
  • South African Institute of Chartered Accountants (SAICA)

 

SEC (US Securities and Exchange Commission) (dark gray) Image

Panelists for SEC roundtable on fair value accounting

04 Jul 2008

The US Securities and Exchange Commission has announced the names of the participants in its public roundtable on fair value accounting standards.

Board member James J Leisenring will represent the IASB. The roundtable will be held from 9:00am to 12:30pm US EDT on 9 July 2008 at the Commission's headquarters in Washington, D.C. The roundtable will be webcast live and later archived on the SEC's Website. Click for the Announcement of Participants (PDF 59k). There is more information in our News Story of 29 June 2008.

 

European Union (old) Image

Commissioner McCreevy discusses the 'credit crunch'

04 Jul 2008

EU Commissioner for Internal Markets and Services Charlie McCreevy spoke about The Financial Turmoil – The Role of the EU-Commission at a meeting of the The Centre for European Policy Studies in Brussels.

Among other things, he discussed the IASB's current efforts to address the valuation of illiquid financial assets. He said that the solution lies in improved valuation techniques and not in disregarding fair value changes entirely. An excerpt:

There have been calls to temporarily disregard fair value accounting in order to neutralise possible pro-cyclical effects and avoid having to write-down assets. Intervention right now risks adding to the confusion and create even greater distrust in companies' accounts. What is needed is additional guidance on the valuation of complex and illiquid financial instruments. This has also been underscored in a report published by the Committee of European Banking Supervisors (CEBS) last month. It highlighted a number of accounting issues that may require further attention of accounting standards setters in order to improve consistency, comparability and transparency of valuation practices.
Click to view The Financial Turmoil – The Role of the EU-Commission (PDF 75k).
Here's a link to our Credit Crunch Page.
IFRIC (International Financial Reporting Interpretations Committee) (blue) Image

Agenda for 10-11 July 2008 IFRIC meeting

03 Jul 2008

The International Financial Reporting Interpretations Committee (IFRIC) will meet at the IASB's offices in London on Thursday and Friday 10-11 July 2008. The meeting is open to the public and will be webcast.

The tentative agenda is shown below.

Agenda for the IFRIC Meeting
10-11 July 2008, London
Thursday 10 July 2008 (10:00-17:00)

Friday 11 July 2008 (9:00-Noon)

  • Review of Tentative Agenda Decisions published in May IFRIC Update
    • IAS 39: Application of the Effective Interest Rate Method
  • Staff Recommendations for Tentative Agenda Decision
  • Administrative Session
    • IFRIC work in progress

 

gios.jpg Image

New Global IFRS and Offerings Services newsletter

03 Jul 2008

We have posted the May-June 2008 Edition of the Deloitte Global IFRS and Offerings Services Newsletter.

Global IFRS and 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. The GIOS Newsletter is an update on relevant GAAP, regulatory, and other matters, webcasts, and publications, with hyperlinks to source material.
Click to view May-June 2008 Edition of the Deloitte Global IFRS and Offerings Services Newsletter (PDF 155k).

 

IFRIC (International Financial Reporting Interpretations Committee) (blue) Image

IFRIC guidance on hedge of an investment in a foreign operation

03 Jul 2008

The International Financial Reporting Interpretations Committee has issued an Interpretation, IFRIC 16 'Hedges of a Net Investment in a Foreign Operation'.

Currently, practice has diverged as a result of differing views on which risks are eligible for hedge accounting under IAS 39.

IFRIC 16 clarifies three main issues:

  1. Whether risk arises from (a) the foreign currency exposure to the functional currencies of the foreign operation and the parent entity, or from (b) the foreign currency exposure to the functional currency of the foreign operation and the presentation currency of the parent entity's consolidated financial statements. IFRIC 16 concludes that the presentation currency does not create an exposure to which an entity may apply hedge accounting. Consequently, a parent entity may designate as a hedged risk only the foreign exchange differences arising from a difference between its own functional currency and that of its foreign operation.
  2. Which entity within a group can hold a hedging instrument in a hedge of a net investment in a foreign operation and in particular whether the parent entity holding the net investment in a foreign operation must also hold the hedging instrument. IFRIC 16 concludes that the hedging instrument(s) may be held by any entity or entities within the group.
  3. How an entity should determine the amounts to be reclassified from equity to profit or loss for both the hedging instrument and the hedged item when the entity disposes of the investment. IFRIC 16 concludes that while IAS 39 must be applied to determine the amount that needs to be reclassified to profit or loss from the foreign currency translation reserve in respect of the hedging instrument, IAS 21 must be applied in respect of the hedged item.

IFRIC 16 is effective for annual periods beginning on or after 1 October 2008 and may be applied prospectively. Earlier application is permitted.

Click for the Press Release (PDF 59k).

 

IFRIC (International Financial Reporting Interpretations Committee) (blue) Image

IFRIC issues Interpretation on construction of real estate

03 Jul 2008

The International Financial Reporting Interpretations Committee has issued an Interpretation, IFRIC 15 'Agreements for the Construction of Real Estate'.

IFRIC 15 standardises accounting practice across jurisdictions for the recognition of revenue by real estate developers for sales of units, such as apartments or houses, 'off plan' – that is, before construction is complete.

Observations about IFRIC 15:

  • Fundamental issue. The fundamental issue is whether the developer is selling goods – the completed apartment or house – or is selling a service – a construction service as a contractor engaged by the buyer. Revenue from selling goods is normally recognised at delivery. Revenue from selling services is normally recognised on a percentage-of-completion basis as construction progresses. IFRIC 15 provides guidance on how to determine whether an agreement for the construction of real estate is within the scope of IAS 11 Construction Contracts or IAS 18 Revenue and, accordingly, when revenue from the construction should be recognised.
  • IAS 11 or IAS 18? An agreement for the construction of real estate is a construction contract within the scope of IAS 11 only when the buyer is able to specify the major structural elements of the design of the real estate before construction begins and/or specify major structural changes once construction is in progress (whether it exercises that ability or not). If the buyer has that ability, IAS 11 applies. If the buyer does not have that ability, IAS 18 applies.
  • If IAS 18, service or goods? Even if IAS 18 applies, the agreement may be to provide construction services rather than goods. This would likely be the case, for instance, if the entity is not required to acquire and supply construction materials. If the entity is required to provide services together with construction materials in order to perform its contractual obligation to deliver real estate to the buyer, the agreement for the sale of goods under IAS 18.
  • Implications of IFRIC 15. The main expected change in practice is a shift for some entities from recognising revenue as construction progresses to recognising revenue at a single time – at completion upon or after delivery. Agreements that will be affected will be mainly those currently accounted for in accordance with IAS 11 that do not meet the definition of a construction contract as interpreted by the IFRIC and do not transfer to the buyer control and the significant risks and rewards of ownership of the work in progress in its current state as construction progresses.

IFRIC 15 is effective for annual periods beginning on or after 1 January 2009 and must be applied retrospectively. Earlier application is permitted. Click for the Press Release (PDF 55k).

Deloitte (secondary logo) Image

Deloitte LLP will construct US$300 million learning centre in Texas

02 Jul 2008

Deloitte LLP (United States) will invest approximately $300 million in the creation of a state-of-the-art learning and leadership development center in the Dallas-Ft. Worth area in Westlake, Texas.

Construction on the new facility will begin in 2009, and the center is expected to open in 2011. The facility will serve as a central destination for all of Deloitte's talent, including everyone from new hires to senior leadership to partners, principals, and directors. The 750,000-square-foot campus will have 800 guest rooms. Click for News Release (PDF 53k).

 

Canada Image

Canadian companies will be able to elect early IFRS adoption

02 Jul 2008

The Canadian Securities Administrators (representing Canada's 13 provincial and territorial securities regulators) have issued a Staff Notice setting out CSA staff views on possible changes to securities rules relating to Canada's transition to IFRSs for publicly accountable entities in 2011.

The CSA Staff Notice is No. 52-321 titled Early Adoption of International Financial Reporting Standards, Use of US GAAP, and Reference to IFRS-IASB (PDF 46k). The CSA staff's three principal conclusions are:
  1. CSA staff are prepared to permit, on a case by case basis, a domestic issuer to prepare its financial statements in accordance with IFRS-IASB for financial periods beginning before 1 January 2011. Permission would depend on the regulator's assessment of how well prepared the company is to deal with the change.
  2. CSA staff propose retaining the existing option for a domestic issuer that is also a US SEC issuer to use US GAAP.
  3. It is preferable for securities rules to require a domestic issuer to prepare its financial statements in accordance with IFRS-IASB after the mandatory changeover date, rather than Canadian GAAP, and require an audit report on such annual financial statements to refer to IFRSs as issued by the IASB.
IASC Foundation (blue) Image

IASCF trustees will meet 8-9 July 2008 in Washington

01 Jul 2008

The Trustees of the IASC Foundation, under which the IASB operates, will meet in Washington, DC on 8 and 9 July 2008. The session on 8 July is open to public observation 09:30am to 17:00pm.

The agenda for the public session is as follows:

iascfagenda.gif
Washington, DC, 8 July 2008 (Public Session)

  • Review of the Constitution Review Proposals
    • Report of 19 June 2008 Roundtables and analysis of comments
    • Review and possible approval of proposals for formal publication
  • Proposals regarding the future of the Standards Advisory Council
  • Report of the IASB
    • Report of the joint IASB-FASB meeting and proposed strategy to complete the Memorandum of Understanding
    • Response to the credit crisis and the Financial Stability Forum report
    • Report on ongoing discussions aimed at eliminating the IAS 39 'carve out'
    • Update on the IASB's work programme and other convergence initiatives
    • New agenda items
  • Report of the SAC Chairman
  • Report of the Due Process Oversight Committee
    • Establishment of a review of IASB working groups
    • Update to the IASB Due Process Handbook
    • Topics for the Committee's next joint meeting with the IASB (September)
  • Funding Update

 

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.