Welcome to the forty-fifth edition of Accounting & Auditing News Today for 2007. What follows is a brief update on changes and proposed changes in the financial reporting and auditing sphere.
The Australian Accounting Standards Board (AASB) meeting was held in Melbourne on 14-15 November. Highlights of the meeting included:
The following compiled standards resulting from the AASB 2007-4 amendments have been added to the AASB website:
This completes the compilations required by Omnibus AASB 2007-4, which introduced changes to bring the text of the AASBs closer to that of the underlying IFRSs as a result of ED 151.
The Institute of Chartered Accountants is hosting the next Sydney AIFRS Corporate Discussion Group Meeting on Monday 10th December 2007 at its Sydney offices at 33 Erskine Street, Sydney NSW 2000.
The meeting will be chaired by David Southwell CA, CA for Group Reporting at Insurance Australia Group. Kim Heng, a partner within KPMG Australia's National Technical Advisory team, will be the guest speaker for this forum. She will be leading a discussion on the practical issues arising from the revised AASB 101 ‘Presentation of Financial Statements’ and the IASB’s Annual Improvements Project.
The lunchtime meeting will begin at 12.30pm at the Level 1 Conference Centre and conclude at 2:00pm. If you wish to attend this forum, please send your name, member number, position and organisation to benjamin.lau@charteredaccountants.com.au by Wednesday 5th December 2007.
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The draft set of competency requirements developed for auditors of SMSFs by the Institute, along with the CPA Australia and the NIA, has involved consultations with stakeholders.
It is mandatory for a member undertaking an SMSF audit to meet the following requirements:
The competency requirement will be operative for financial reporting periods commencing on, or after, 1 July 2008. However, members are encouraged to adopt these requirements earlier.
The competency requirement recognises that the auditing of SMSFs is an area that has grown significantly in recent years, where additional guidance for members is appropriate. It does not represent the establishment of a designated specialisation.
As part of the consultation process the Institute will consider member feedback before the requirements are finalised in early 2008. Comments should be forwarded to techsubmissions@charteredaccountants.com.au by 7 December 2007.
The most recent meeting of the International Financial Reporting Interpretations Committee (IFRIC) was held in London on 1 and 2 November. Full details of the IFRIC deliberations are available in the IFRIC update.
Treatment of employee contributions (IAS 19) – IAS 19 already contains guidance implying that employee contributions are taken into account in determining the employer’s benefit obligation
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6. Removal of IFRS reconciliation for foreign private issuers
Last week, the US Securities Exchange Commission (SEC) responded unanimously, approving rule amendments under which financial statements from foreign private issuers in the U.S. will be accepted without reconciliation to U.S. GAAP, only if they are prepared using IFRS. This is a move that seeks to help American investors better analyse and access comparable financial information from the US-registered foreign companies in which they invest. The IASB has welcomed SEC’s response.
The Financial Accounting Standards Board (FASB) and its oversight foundation, the Financial Accounting Foundation (FAF) had earlier asked the SEC to delay the removal of the reconciliation from IFRS to US GAAP, suggesting the need for the development of a transition plan.
The rule amendments will take effect 60 days after they are published in the Federal Register. They will apply to financial statements covering years ended after 15 November 2007.
To see the full media release from SEC, see:
http://www.sec.gov/news/press/2007/2007-235.htm.
To see the press release from the IASB, see:
http://www.iasb.org/News/Press+Releases/The+IASB+welcomes+SEC+vote+to+remove+reconciliation+requirement.htm.
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7. Changes to Queensland Associations law
Recent changes in Queensland to the Associations Incorporation Act 1981 (the Act) have simplified the annual financial reporting for many of the 20,000 registered associations in Queensland.
Previously, the Act treated all associations equally, requiring the same financial reporting irrespective of their size, activity or revenue. Changes to the Act mean that associations will now have different financial reporting requirements depending on whether they are a Level 1, Level 2 or Level 3 association.
Level 1 associations have either current assets of more than $100,000 or total revenue of more than $100,000. There is no change in financial reporting requirements for Level 1 associations. These associations must continue to lodge financial statements audited by a:
- Person registered as an auditor under the Corporations Act 2001; or
- Member of CPA Australia who is entitled to use the letters 'CPA' or 'FCPA'; or
- Member of the Institute of Chartered Accountants in Australia who is entitled to use the letters 'CA' or 'FCA'; or
- Member of the National Institute of Accountants who is entitled to use the letters 'MNIA, 'FNIA', 'PNA', or FPNA'.
Unless an audit is required by its rules/constitution or other legislation (such as the Gaming Machines Act 1991 or the Collections Act 1996), Level 2 and Level 3 associations are now required to lodge financial statements that have been verified rather than audited.
Level 2 associations have either current assets between $20,000 and $100,000, or total revenue between $20,000 and $100,000. Their financial statements must be verified by a person who can audit Level 1 associations or by a person approved by the Chief Executive.
Level 3 associations have total revenue of less than $20,000 and current assets of less than $20,000. Level 3 associations need to lodge financial statements that have been verified by the President or Treasurer of the association.
These revised reporting requirements apply to financial years that end after 15 June 2007.
A Fact Sheet detailing the changes and appropriate wording for the verifications is available from the Queensland Government’s Office of Fair Trading.
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8. Institute needs another Consultant
The Institute is looking for another Reporting and Assurance Consultant at a manager or senior accountant level, who will be able to assist the current team in providing technical assistance to our members. This includes nominating relevant issues and analysing, researching for and preparing submissions on key accounting and auditing matters. Flexible hours are available.
For further details, see the job advertisement.
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9. SBR/XBRL International Conference – 27-28 November 2007
The Australian Standard Business Reporting (SBR) Programme will be hosting the 2007 SBR/XBRL International Conference on 27-28 November at Hilton International, Brisbane. SBR is a multi-agency programme that will simplify the way that businesses report to the government. Implementation of SBR for financial reporting is scheduled for mid-2010, with pilots and proof-of-concepts beginning in 2008.
Sessions will be presented by experts from the accounting/finance and software developer industries, XBRL and government regulators from the Netherlands (where a similar system is already in use), the United Kingdom, the United States, Singapore, New Zealand and Australia.
For more information on how to get involved and to register online, go to http://www.sbrconference.com.
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10. Query of the Week – solicitors’ trust accounts
Q: I have heard that there have been recent changes to solicitors’ trust account rules in NSW. Can you give me more details?
A: Changes to the solicitors' trust account audit (external examinations) requirements apply for years beginning 1 April 2007. Note that the auditor is now called the "external examiner" and no longer has to be a registered company auditor, but has to be designated by the Law Society of NSW and appointed by the law practice.
Under the Legal Profession Act 2004, the person must be a designated person in order to be eligible to be appointed by a law practice to conduct the practice's trust account examination. The Legal Profession Regulation 2005 gives the Law Society Council power to designate persons as eligible to be appointed as external examiners. The Law Society Council has determined that persons eligible to be appointed as external examiners are:
- a member of CPA Australia who holds a current public practice certificate, or
- a member of Institute of Chartered Accountants Australia who holds a current certificate of public practice, or
- a member of the National Institute of Accountants who holds a current certificate of public practice, or
- registered as an auditor under Part 9.2 of the Corporations Act 2001 (Cth);
and have successfully completed an education course required by the Law Society Council.
The education course is conducted by the Law Society and the person must complete the course to be eligible to undertake external examinations in NSW. At present, the course must be completed by the principal responsible for signing off the report.
Course dates have not yet been set but it is intended that the courses will start in November/December 2007. Registered company auditors who completed the 2007 External Examiner's Report will be notified of the course dates as they are on the Law Society's mailing list. However, if there are any Institute members (who are not registered company auditors but are in public practice) who have not done the 2007 External Examiner's Report but are interested in attending the course in preparation for the 2008 External Examiner's Report, they should send an email (with their contact details) to tcopas@lawsocnsw.asn.au to go on a mailing list to be contacted when course dates are set.
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11. Training and development at the Institute
Audit of Self Managed Superannuation Funds Workshop
Throughout November in Melbourne & Sydney.
Now that the new auditing standards apply to SMSF audits, don't miss out on ensuring your audits of SMSFs are compliant with the regulatory requirements.
Superannuation Day
Throughout November in Adelaide & Perth.
Explore essential SMSF updates and insights, now that ‘Better Super’ reforms are in place. Delve into the planning issues and pitfalls, focusing on how to identify the triggers.
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.
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.
Accounting Day
Accounting Day is an essential day for professionals in small to medium enterprises to be up to date with financial reporting. The event will take place next week for readers in Adelaide, Melbourne and Perth, so it is imperative to register as soon as possible. Please refer to the above webpage to register your seat today. The dates of the remaining events are as follows:
- Adelaide – 19 November 2007
- Melbourne – 21 November 2007
- Perth – 22 November 2007
Chartered Accountants Financial Executives Leadership Conference
Wednesday 21 November – Thursday 22 November 2007
With the goal of driving future value and growth, this conference examines the most important issues that impact you and your business.
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12. EDs: comment closing dates
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.
17 November 2007
IASB Insurance Discussion Paper ‘Preliminary Views on Insurance Contacts’
IASB Discussion Paper "Preliminary Views on Insurance Contracts"
30 November 2007
AASB ED 157: Joint Arrangements'
AASB ED 158: 'Proposed changes to AASB 139'
AASB ED 159: 'Proposed Improvements to Australian Accounting Standards'
AASB Consultation Paper on Consolidation of Subsidiaries by Superannuation Entities
IAASB Consultation Paper on Proposed Future Technical Strategy
ISA 700 (Redrafted) 'The Independent Auditor's Report on General Purpose Financial Statements'
ISA 705 (Revised and Redrafted) 'Modifications to the Opinion in the Independent Auditor's Report'
ISA 706 (Revised and Redrafted) 'Emphasis of Matter Paragraphs and Other Matter(s) Paragraphs in the Independent Auditor's Report'
ISA 800 (Revised and Redrafted) 'Special Considerations-Audits of Special Purpose Financial Statements and Specific Elements, Accounts or Items of a Financial Statement'
ISA 805 (Revised and Redrafted) 'Engagements to Report on Summary Financial Statements'
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. [ANT45_07_11_16.doc]
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