|
Welcome to the first edition of our ANT newsletter for 2008. The Reporting and Assurance Team at the Institute wish you a happy, healthy and prosperous 2008. We look forward to keeping you up to date with the latest news throughout the year.
As you can see, ANT now has both a new title "Accounting & Assurance News Today" and a new design. The change in name, replacing "Audit" with "Assurance" better describes the breadth of topics that now fit within this area of the profession. The redesign aims to make it easier for you to access all the information ANT provides. We hope you find the new format informative and helpful.
ANT now also includes a "Your Input" section which allows you to share your thoughts and experiences on issues involving financial reporting and assurance. We encourage you to participate and help us make ANT even more relevant to your reading needs.
1. AASB issues ITC 14 on proposed guidance for not-for-profit entities
The Australian Accounting Standards Board (AASB) has issued Invitation to Comment ITC 14 "Proposed Definition and Guidance for Not-for-Profit Entities". It represents the first stage of the Board's project to address the financial reporting needs of not for profit entities.
ITC 14 explores whether clarification and/or guidance is required in the determination of a 'not-for-profit entity'. It also incorporates material from the New Zealand Financial Reporting Standards Board, which has undertaken significant work in this field.
ITC 14 requests comments on:
- whether there should be one definition that covers both the public and private sectors
- whether 'not-for-profit entity' or 'public benefit entity' should be the appropriate term to use
- the nature and extent of the definition
- the nature and extent of any guidance
- whether entities should be required to disclose that they are for-profit or not-for-profit
ITC 14 can be downloaded from the AASB website. Comments close 31 March 2008. Members are encouraged to make their own submissions to the AASB or may provide feedback to be included in the Institute submission by emailing techsubmissions@charteredaccountants.com.au.
2. IASB issues revised IFRS 3 and amended IAS 27 and IFRS 2
IFRS 3/IAS 27
The International Accounting Standards Board (IASB) has issued a revised IFRS 3 "Business Combinations" and amended IAS 27 "Consolidated and Separate Financial Statements".
Revised IFRS 3 marks the completion of the second phase of the IASB's business combinations project. The AASB expects to adopt the revised standard unamended with only possible changes in the application to not-for-profits.
Key changes to the standard include:
- The requirement to expense of acquisition related transaction costs
- measurement of contingent consideration at acquisition date with subsequent changes to profit or loss
- measurement of non-controlled interests at full fair value or the proportionate share of the fair value of the underlying net assets
- includes in scope, business combinations by contract alone and mutual entities
- goodwill associated with step acquisitions will be calculated on the day control is obtained after fair-valuing any prior investments
In the media release announcing the amended standards, Sir David Tweedie, IASB Chairman said ". now the accounting requirements in IFRSs and US GAAP will substantially be the same."
The revised and amended standards are applicable on 1 July 2009, with earlier adoption permitted for periods beginning on or after 30 June 2007. These standards can be downloaded by eIFRS subscribers from the IASB website.
IFRS 2
The IASB has issued an amendment to IFRS 2 "Share-based Payment" dealing with 2 matters:
- it clarifies that vesting conditions are service conditions and performance conditions only
- it specifies that all cancellations should receive the same accounting treatment
The IASB previously issued guidance on the determination of whether a condition is a vesting condition and on the accounting treatment for conditions that are not vesting conditions.
The amendment will apply for annual periods beginning on or after 1 January 2009, with earlier adoption permitted. This standard can be downloaded by eIFRS subscribers from the IASB website.
3. Form for lodgement requirements for small foreign companies amended
The Australian Securities and Investments Commission (ASIC) has recently amended the form dealing with the lodging requirements for certain small foreign companies in order to reduce the administrative burden on these entities.
Previously if these companies were taking advantage of the financial reporting relief provided by class order 98/98 "Small proprietary companies which are controlled by a foreign company but which are not part of a large group", they were required to lodge a form 384 for each year they took advantage of the relief. Now companies will generally only need to lodge form 384 for the first financial year in which they wish to take advantage of CO98/98 relief.
Companies which took advantage of this relief in their previous financial year are no longer required to lodge form 384 for this and subsequent financial years.
However when they cease to take advantage of the class order relief they will be required to lodge a form 394 unless they lodge a set of financial statements for that year. The changes have been made by issuing CO07/82 amending CO98/98.
For further information about the new requirements, please refer to the explanatory memorandum accompanying the class order release and to Regulatory Guide 58 (RG 58) "Reporting requirements - registered foreign companies and Australian companies with foreign company shareholders" (updated January 2008).
4. IASB meeting highlights - 11-14 December 2007
The International Accounting Standards Board (IASB) met on 11-14 December and their update summarising the decisions can be downloaded from the IASB December meeting page.
Agenda Proposals
The Board decided the following:
- not to add a project on intangible assets to its active agenda
- to activate work on its Emissions Trading Schemes project
- to add common control transactions to its active agenda
- to move the management commentary project from its research agenda to its active agenda in anticipation of producing a guidance document
Annual improvements process
The Board discussed four issues for the annual improvements process which will be included in the 2008 exposure draft. These issues related to segment reporting and financial instruments.
Conceptual Framework
The Board tentatively decided that:
- the IASB and FASB definition of liability should converge and focus on defining a liability as an economic obligation rather than a probable future sacrifice
- essential attributes of an enforceable obligation include the involvement of a separate party and the existence of a mechanism that is capable of forcing an entity to take a specified course of action
Post-employment benefits
The Board continued to finalise its discussion paper for publication in the first quarter of 2008.
IFRS 5
The Board discussed the proposal by the International Financial Reporting Interpretations Committee (IFRIC) and amended IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations" in order to enable it to apply to non-current assets that are held for distribution to owners.
Liabilities and Equity
The Board decided to publish a discussion paper in the first quarter of 2008 containing the FASB's Preliminary Views document "Financial Instruments with Characteristics of Equity" and the IASB's Invitation to Comment.
Revenue Recognition
The Board continued its deliberations of the two revenue recognition models that had been developed by staff. In particular it proceeded on how changes in the contract asset or liability should be presented in the profit or loss.
5. IASB meeting agenda - 22-24 January 2008
The next meeting of the International Accounting Standards Board (IASB) will be held in London on 22-24 January 2008. Items listed for consideration on the agenda include:
- Revenue recognition - consideration of models for revenue recognition
- Annual improvements process
- Financial instruments - discussion of proposed questions to be included in the discussion paper
- Liabilities & equity - discussion of staff draft of the ITC
- Related party disclosures - redeliberation of the proposed amendments to IAS 24
The agenda is available for download from the IASB January meeting website.
6. AFS licensees audit guidance
The Australian Securities and Investments Commission (ASIC) and Auditing and Assurance Standards Board (AUASB) have reaffirmed audit and review requirements for auditors of AFS licensees through the recent issuance of:
- Guidance Statement 003 "Audit and Review Requirements for Australian Financial Services Licensees under the Corporations Act" (AUASB website)
- updated ASIC Forms FS70 and FS71 (ASIC website)
- updated Regulatory Guide 34 "Auditor's obligations: reporting to ASIC" (RG 34) (ASIC website)
GS 003 provides guidance for auditors of AFS licensees in relation to the audit and review requirements under the AUASB's Auditing Standards (ASAs), Standards on Assurance Engagements (ASAEs), Standards on Review Engagements (ASREs) and the Corporations Act. It was issued in early November 2007, replacing AGS 1068 and was applicable from 31 October 2007. In particular the revised guidance covers the statement by the auditor, in relation to section 990K(2) of the Act, as required in the FS 71 "Audit Report" that is required to be lodged with ASIC, detailing any matters the auditor has become aware of during or since the financial year that have not previously been reported to ASIC.
ASIC has also now inserted related guidance dealing with section 990K into RG 34. Previously, RG 34 only provided guidance to auditors of companies and registered schemes relating to the reporting of certain and suspected contraventions of s311 and s601HG. The new guide was released in late December.
The new section 990K statement has significant implications for auditors of AFS licensees, including:
- the performance of additional review procedures in the period between balance date and the date the auditor signs the FS71
- consideration of which s990K breaches are reported to ASIC at year end
Auditors are reminded to ensure they actively consider these requirements when auditing AFS licensees.
Institute training
The Institute will be offering training in the audit of AFS licensees in April 2008, which will cover these requirements. The 3-hour seminar will follow a 3-hour audit update. The dates for this training are:
- Sydney: 1 April 2008
- Brisbane: 3 April 2008
- Adelaide: 14 April 2008
- Perth: 17 April 2008
- Melbourne: 29 April 2008
Details will be available on the Institute's training and development website soon.
7. IESBA meeting agenda - 21-23 January 2008
The next meeting of the International Ethics Standards Board for Accountants (IESBA) will be 21-23 January 2008 in Amsterdam, Netherlands.
The meeting will address proposed 'pre-drafting' changes to sections 290 (Independence - Audit and Review Engagements) and 291 (Independence - Other Assurance Engagements) of the Code of Ethics resulting from the December 2006 exposure draft.
It will also consider independence issues arising from the provision of internal audit services by the external auditor, fees-relative size and contingent fees.
Refer to the IESBA meetings website for further information.
Disclosing directors' ages
Q: I have noticed that some specimen accounts disclose the ages of the directors in the Directors' Report and some do not. I thought it was a legal requirement but cannot find it in the Corporations Act.
A: There used to be a mandatory retiring age of 72 for directors of public companies, and as a result of this, the directors' ages were disclosed under S 300(10) as part of the directors' qualifications and experience. The mandatory retiring age was removed in the CLERP 7 reforms in 2003 and so it can be argued that age is no longer relevant as a qualification for office. Some of the major firms recommend disclosing the directors' age as best practice and some have removed it, hence the discrepancy between the specimen accounts you may have seen. Note that some companies still retain mandatory retiring ages in their constitutions and in such cases age would be a relevant qualification.
Listed below are the notable upcoming open domestic and international accounting and assurance exposure drafts. Members are encouraged to prepare their own submission on each document and submit them to the Institute (techsubmissions@charteredaccountants.com.au) no later than one week before the closing date shown.
13 February 2008
AASB ED 160 "Proposed amendments to IFRS 1 and IAS 27 - Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate"
15 February 2008
AUASB ED Proposed ASAE 3100 "Compliance Engagements"
29 February 2008
AASB ED 161 Proposed Amendments to AASB 2 and AASB Interpretation 11, Group Cash-settled Share-based Payment Transactions
31 March 2008
AASB ITC 14 "Proposed Definition and Guidance for Not-for-Profit Entities"
For further exposure drafts, refer to our exposure drafts webpage.
Help us to improve the newsletter by sharing your financial reporting and auditing issues and experiences that might be of interest to other members. Responses should be emailed to "Your Input" (techsubmissions@charteredaccountants.com.au) and may be published in future editions of ANT.
Accounting & Assurance News Today is an initiative of the Reporting and Assurance Team of the Institute of Chartered Accountants in Australia.
Disclaimer
This is an initiative of, and has been prepared by the Reporting and Assurance Team of the Institute of Chartered Accountants in Australia. While every effort has been made to ensure the accuracy of the information contained therein, neither the Institute nor its employees shall be liable on any grounds whatsoever in respect of decisions or actions taken as a result of using this publication. The information provided is a general guide only and should not be used, relied on or treated as a substitute for specific professional advice or referral to the relevant specific standard.
The information is this email is confidential to the named addressee and subject to copyright. No one else may read, print, store, copy, forward or act in reliance on all or any of this email or its attachments. If you are not he intended recipient, any use, reliance upon, disclosure or copying of this email is prohibited and unlawful. If you have received this email in error please notify the sender. The Institute of Chartered Accountants in Australia (ABN 50 084 642 571) does not warrant that this email and any attachments are error or virus free and recommends that all attachments be checked for computer viruses.
| 
The Institute’s education and training pathway is the preferred choice for industry professionals.
Considering a career as a Chartered Accountant? Looking for the next step in your professional life?
The Institute is leading the debate in the areas that matter most to business and the accounting profession. 
The Institute produces an invaluable suite of tools, guidance, products and services to help members in their work. 
Print this article
Email this Article
Back to Top
