Accounting and Auditing News Today (ANT) Issue No 47 - 30 November 2007

Welcome to the forty-seventh edition of Accounting & Auditing News Today for 2007. What follows is a brief update on changes and proposed changes in the financial reporting sphere.

1. AASB releases Petroleum Resource Rent Tax Interpretation

The Australian Accounting Standards Board (AASB) has just released AASB Interpretation 1003 "Petroleum Resource Rent Tax" (APRRT). Australian oil and gas companies will now have to account for the APRRT as an income tax, under AASB 112 "Income Taxes".

The Interpretation can be accessed on the AASB website and will apply to Australian reporting entities for annual reporting periods ending on, or after, 30 June 2008.
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The AASB has issued a proposed agenda rejection statement on the recognition of franked dividend revenue under AASB 118.

At present, the accounting standards do not specify whether an entity should recognise franked dividend revenue on a net or gross basis. The AASB considers that franked dividend revenue should continue to be recognised on a net basis, but is not proposing to issue an interpretation as there is no evidence of divergent practice. This is consistent with the decision taken by the UIG when it considered this issue in 1998, when again it did not consider that the query warranted the formal issue of an Abstract.

The Institute proposes to support the AASB in this matter. Members with an alternative perspective on this issue are encouraged to email their view to our submissions inbox.

Comments for this issue proposal close on 3 December 2007.
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The AASB has published on its website a Table of Standards that are mandatorily applicable for financial years beginning on 1 July 2007 (ending 30 June 2008).
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The next Auditing and Assurance Standards Board (AUASB) meeting will be held in Melbourne on 3 December. Agenda items include:

• ASRE 2400 Review of Financial Reports and Other Financial Information
• ASAE 3500 Performance Engagements
• GS Audit Implications of the Use of Service Organisations for Investment Management Services
• New Zealand Professional Standards Board (closed session)
• AUASB Consultative Meeting (closed session)
• GS 006 Electronic Publication of the Auditor's Report
• IAASB Matters
• Guidance Statement on SMSF Audits

This week, the Institute attended the Standard Business Reporting/Extensible Business Reporting Language (SBR/XBRL) International conference held in Brisbane. The conference informed members of the accounting/finance and software development industries about the impact that SBR will have on their work.

SBR will simplify financial reporting (through utilisation of XBRL) by:

• making forms easier to understand
• utilising accounting/record-keeping software to automatically pre-fill government forms; and
• introducing a single secure way to interact with participating agencies (APRA, ASIC, ATO, Australian Bureau of Statistics [ABS], Office of State Revenue [OSR]).

This programme has the potential to significantly reduce compliance time and effort in business-to-government reporting for public practitioners and chartered accountants in business. Pilot testing is due to commence during 2008 with full implementation of SBR in the area of financial reporting complete in 2010.

Members interested in helping to develop the SBR solution can contact Kerry Hicks, Head of Reporting, (kerry.hicks@charteredaccountants.com.au) who can pass your details onto The Treasury, who are co-ordinating the programme.
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The Australian National Centre for Audit and Assurance Research (ANCAAR) at the ANU will be hosting its 5th Annual Forum on Friday 30 November to Saturday 1 December 2007. It will be an opportunity for audit researchers from all over the country to discuss and work towards an improvement in auditing practice, thereby making research useful to the wider community of auditing professionals. One or more senior staff from the Institute will be in attendance at this forum.
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The next meeting of the International Accounting Standards Board (IASB) will be held in London on 11-14 December 2007. Items listed for consideration on the agenda include:

• Agenda proposals
• Annual improvements process
• Conceptual framework
• Fair value measurement
• Financial instruments - derecognition research project
• IFRIC: Amendments to IFRS 5
• Liabilities: Amendments to IAS 37
• Liabilities & equity
• Post employment benefits
• Puttable financial instruments and obligations arising on liquidation
• Revenue recognition
• Technical plan

This month's Charter includes:

• our usual roundup of financial reporting and auditing news in "The Panel"
• an explanation of the IASB proposals affecting insurance accounting, from David Southwell of IAG
• a discussion of an appropriate definition for the not-for-profit sector by Lorne Cummings and colleagues at Macquarie University
• a review of the changes likely in the forthcoming revised standard on business combinations AASB 3 by Julie Smith and Dr Julian Griffiths of PricewaterhouseCoopers.

Due to technical difficulties, last week's edition of ANT contained a number of formatting and referencing errors. We apologise for any inconvenience caused to our readers.

Readers can view a corrected version of ANT46 on the Institute website.
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Q: I wish to apply to become a registered company auditor. Where can I find some more information on what's involved and some assistance in completing the documents?

A: The auditor registration requirements contained in section 1280 of the Corporations Act were significantly amended with the passage of the CLERP 9 legislation in 2004. The changes eased the difficulties that many auditors, especially those in rural and regional areas, were having in meeting the experience requirements prescribed by the legislation.

Auditors still have to meet the educational requirements prescribed, but now have a choice of either complying with the practical experience rules, or satisfying the components of an "audit competency standard" (see section 1280(2)).

ASIC has recently updated its guidance on the application of section 1280 for individuals and companies seeking registration as a company auditor or an authorised audit company. To simplify the registration process for prospective auditors, they have now located all their guidance about registration in one document - Regulatory Guide 180 "Auditor Registration" (RG 180). This document replaces Policy Statement 180, last issued in 2004.

The Institute website contains a copy of the approved competency standard referred to in section E of RG 180 (para RG180.77), as well as a logbook to assist members in complying with the standard. It also contains reference to an article summarising the main features of the competency requirements published in May 2005's Charter, as well as a series of frequently asked questions.
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Audit Day
Throughout December in Adelaide, Sydney, Brisbane, Melbourne & Perth
Highlighting key audit topics. Sessions include: Auditing update; Audit of Not for profit and Registered Clubs, Audit Quality Control and independence requirements.

New Employees Workshop 2008
Throughout February in Brisbane, Melbourne, Sydney, Parramatta, Newcastle & Albury. Five day workshop.
Give your new employees the practical experience and real-life skills they need to deliver professionally at the New Employees Workshop.

National Audit Conference 2007 DVD
If you didn't attend the National Audit Conference in June 2007 - don't miss out on this opportunity to view the conference at your convenience informing you and your colleagues.

Corporate Accountants Toolkit Series
*NEW PRODUCT* Access the latest updates in accounting standards and the impact of these changes on financial reporting requirements by purchasing Module 1 and Module 2 of the Corporate Accountants Toolkit.
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Outlined below are the comment closing dates for all current exposure drafts. Members are encouraged to prepare their own submission on each document and submit them to the Institute no later than one week before the closing date shown.

For more information, refer to the Institute's Technical Standards' exposure drafts web page

Forward all ED submission/comment emails to techsubmissions@charteredaccountants.com.au.

31 December 2007
ISQC 1 (Redrafted) 'Quality Control for Firms that Perform Audits and Reviews of Financial Statement, and Other Assurance and Related Services Engagements'
ED 33 'Amendments to IPSAS 4, The Effects of Changes in Foreign Exchange Rates'
ISA 220 (Redrafted) 'Quality Control for an Audit of Financial Statements'

11 January 2008
IASB's proposed amendments to IAS 39 - 'Exposures Qualifying for Hedge Accounting'
IASB ED 9 "Joint Arrangements"
IASB ED 'Proposed Improvements to International Financial Reporting Standards'

Technical Query Service
The Institute's Reporting and Assurance 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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The Reporting and Assurance team comprises, Jeanette Dawes CA, Roslyn Hatton CA, Kerry Hicks CA, Claire Locke CA, Stephanie Kemp CA, Andrew Stringer; Benjamin Lau, Jane Ma and Adrian Tam - Reporting and Assurance Assistants. [ANT47_07_11_30.doc]