Issue No 35/2006 - ANT35
15 September 2006
HEADLINES
Welcome to the thirty-fifth edition of Accounting & Auditing News Today for 2006. What follows is a brief update on changes and proposed changes in the financial reporting sphere.
1. IFRIC meeting update - 2 new interpretations coming soon
The latest meeting of IFRIC (the IASB's interpretations committee) was held on 7-8 September. At this meeting two new interpretations were approved subject to drafting revisions and these will be submitted to the IASB's October meeting for final approval.
These interpretations are- Service Concessions Arrangements (a revised single interpretation covering the proposals contained in IFRIC s D12-D4; and
- D17 - IFRS 2 Group and treasury share transactions.
More details on these and other issues will follow in ANT when IFRIC releases its detailed meeting update.
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2. AASB's Conceptual Framework Round Tables 8 & 12/9/2006
The AASB RoundTables held at the Institute's Offices in Melbourne and Sydney sparked critical debate and a broad consensus that the draft IASB/FASB Conceptual Framework Discussion Paper on Objective of Financial Reporting, and Qualitative Characteristics of Decision-Useful Financial Reporting Information will need some key amendments if the Framework is to be relevant to Australian conditions. This is not surprising given that the AASB is required to set Accounting Standards for the Public Sector and the Not-for-Profit Sector. However what was surprising is the degree of 'warmth' on the need for 'stewardship' (accountability) to be given equal status to 'investment and credit decisions usefulness' even for the private sector. The argument here is that for non-listed Companies, stewardship is particularly relevant as decisions on investing are restricted by the lack of a liquid market (ie the ASX) for decision-making.
The AASB is seeking Submissions on the Conceptual Framework by 9/10/2006 with Submissions due to the IASB by 3/11/2006. A copy of the Institute's draft Submission is at: http://www.icaa.org.au/tech/index.cfm?menu=291&id=A116254171#17
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3. AUASB calls for comment on usefulness of the AGSs
The Auditing and Assurance Standards Board (AUASB) is currently reviewing the continued relevance of Auditing & Assurance Guidance Statements (AGSs). Feedback from auditors on the extent to which AGSs are used will assist the AUASB in determining whether to update and reissue an AGS or remove the AGS from the AUASBs Pronouncements. Specifically, the AUASB would like to ascertain the extent to which AGS 1050 Audit Issues Relating to the Electronic Presentation of Financial Reports is currently used by auditors.
Please express your views directly to the AUASB by contacting Margaret Salter on (03) 8080 7447 or email: msalter@auasb.gov.au
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4. A differing view on international standards
A recent article in "Thebigpicture weekly review" entitled "International Accounting standards - Do they matter?" reported on the research conclusions from peer reviewed journals and papers about the impact on investment markets around the world arising from the adoption of international accounting standards.
The conclusions generally favoured adoption of international accounting standards as a step toward improving the efficiency of capital markets. However, there was one important qualification. The greatest benefits seemed to come when market inefficiencies were at the most extreme.
For more details visit http://www.thebigpicture.com.au/atc/tbpemail.htm
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5. Consultation Paper on detailed Red Tape Reforms due soon
The Institute is eagerly awaiting the release of the Parliamentary Secretary to the Treasurer's detailed Consultation Paper that is expected to provide details of the increase in the size threshold tests, which require Large Proprietary Companies to prepare and have audited Financial Reports. The previous Consultation Paper issued in April 2006 requested comments on increasing the size threshold tests and the Institute jointly with CPAA and the NIA supported an immediate doubling of these tests as had been earlier flagged. However the Accounting Bodies also drew attention to the need to re-consider the merits of proprietary company reporting and whether similar size threshold tests should be applied to non-listed public companies. ANT will continue to monitor the progress of these mooted reforms, with the Consultation Paper due before the end of this month.
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6. Canadian Government donates to IPSASB
Canada has showed its support to the International Public Sector Accounting Standards Board (IPSASB) by providing funding from the Canadian Treasury for five years. From this month, some of IPSASB's members will be based in Toronto. For further information, see the media release on the IFAC website: http://www.ifac.org/News/LastestReleases.tmpl?NID=1157566831659005
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7. New proposals for guidance on ethics education
IFAC's International Accounting Education Standards Board (IAESB) has proposed new guidance (International Education Practice Statement (IEPS) on the implementation of good practice and maintenance of professional values, ethics and attitudes in accordance with International Education Standard (IES) 4.
The proposed IEPS "Approaches to Developing and Maintaining Professional Values, Ethics and Attitudes" is designed to assist IFAC member bodies in developing ethics education and continuing professional development programs for their members. It highlights good practice in ethics education and stresses the importance of practical experience in the workplace as essential to developing ethical judgment.
The ED can be downloaded from the IFAC website at http://www.ifac.org. Comments are due by 15 December 2006.
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8. United Nations adopts international public sector standards
The General Assembly of the United Nations has approved the adoption of International Public Sector Accounting Standards (IPSASs) by the UN. This would involve a move from a system of modified accrual accounting towards full accrual.
This step is seen to increase the credibility, transparency and authority of all financial transactions and processes of the UN. For further details, see the media release on the IFAC website at http://www.ifac.org/News/LastestReleases.tmpl?NID=1157486348523110.
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9. Query of the week - engagement quality control reviewers
Q. Is an Engagement Quality Control Review (EQCR) needed for a half year review of a listed entity for 30 June 2006 half years ?
A. Auditors of listed entitities are required to appoint an EQCR for all listed entity audits of historical financial information. This includes half year and full year audits.
An EQCR is not technically required for half year reviews, although each firm must have a written policy setting our the criteria for determining whether an ECQR should be appointed for reviews. However, if the firm has been appointed auditor of a listed entity the Institute's view is that it would generally be appropriate to appoint an ECQR for the half year review.
The requirement to appoint an ECQR for listed entity audits and set out criteria for reviews and other audits is included in AUS 206 paragraph 36 (effective for audits of historical financial information for audits commencing on or after 15 June 2005). This is mirrored in the Quality Control standard - APS 5 (paragraph 62(a)) from 31 December 2005, now superceded by APES 320 (paragraph 60(a)).
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The Institute's Technical Standards Team responds to inquiries from members on auditing and financial reporting issues. This service provides general assistance and guidance only. Members have the responsibility to apply their own professional judgment. The service can be contacted on (02) 9290 5702.
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