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Welcome to the tenth edition of Accounting & Assurance News Today for 2008. What follows is a brief update on changes and proposed changes in the financial reporting and assurance sphere.
1. Happy Easter from Reporting & Assurance!
As a result of the Easter long weekend, this week’s ANT is being sent out on Thursday. The Reporting and Assurance team at the Institute would like to wish everyone a happy and safe Easter break. May the Easter bunny bring you basketfuls of Easter eggs!
2. Institute seeking comments on draft IFRIC submissions
The Institute has recently placed on its website draft submissions to the Australian Accounting Standards Board (AASB) and International Financial Interpretations Committee (IFRIC) on D23 ‘Distributions of non cash assets to owners’ and D24 ‘Customer Contributions’.
Members are encouraged to prepare their own submissions to the International Accounting Standards Board (IASB) or to provide feedback to the institute for inclusion in our draft submissions by the end of March.
More details can be found in ANT09/2008 or on our submissions home page.
3. AASB releases omnibus standard 2008-1
The AASB has released on its website AASB 2008-1 ‘Amendment to Australian Accounting Standard - Share-based Payments: Vesting Conditions and Cancellations’ after it was approved at the AASB’s February meeting (see ANT08). This omnibus amending standard makes amendments to AASB 2 ‘Share-based Payment’, in response to the issue of amendments to IFRS 2 ‘Share-based Payment’ by the IASB regarding vesting conditions and cancellations in January 2008.
The standard clarifies that vesting conditions comprise service conditions and performance conditions only and that other features of a share-based payment transaction are not vesting conditions. It is also specified in the standard that all cancellations, whether by the entity or by other parties, should receive the same accounting treatment.
This Standard is applicable to annual reporting periods beginning on or after 1 January 2009, with early adoption allowed. AASB 2008-1 is available for download on the AASB website (pdf).
4. AASB releases compiled Interpretations 1 and 12
The AASB has released the following compiled Interpretations:
Both are effective 1 January 2009, with early adoption allowed.
The Interpretations have been compiled to include the amendments necessitated by the revisions made to AASB 123 ‘Borrowing Costs’. These were released as omnibus amending standard 2007-6 issued in June 2007. However the new compilations do not yet include the consequential amendments arising from the revision of AASB 101 Presentation of Financial Statements issued as omnibus AASB 2007-8 in September 2007.
5. IFRIC meeting update – 6-7 March 2008
The IFRIC met in London on 6 and 7 March 2008. Highlights of the meeting include the following:
IFRIC D21 Real Estate Sales
The IFRIC continued its deliberations on this issue and produced a flowchart to clarify the various issues arising under IAS 18 Revenue and IAS 11 Construction Contracts. The staff is to bring a revised draft of the Interpretation to its next meeting at which stage it expects to finalise the Interpretation.
IFRIC D22 Hedges of a Net Investment in a Foreign Operation
The IFRIC discussed the comment letters received on this interpretation and the comprehensive examples prepared by the staff involving the use of various hedging instruments. A revised draft, reflecting the decisions reached on the various issues raised is to be tabled at the next IFRIC meeting in May for finalisation.
IFRIC agenda decisions
The IFRIC decided not to add to its agenda an item relating to the classification of cash flows under IAS 7 ‘Statement of Cash Flows’. IFRIC decided that the matter can be best resolved by the IASB amending the wording of IAS 7 to clarify that only cash outflows resulting in an asset recognised on the balance sheet can be classified as cash flows from investing activities.
Tentative agenda decisions
The IFRIC has tentatively decided not to add the following items to the agenda and has published its reasons:
- IAS 19 ‘Employee Benefits’ – Settlements
- IAS 37 ‘Provisions, contingent Liabilities and Contingent Assets’ – Deposits on returnable containers
For more details, refer to the March IFRIC Update (pdf).
6. Revisions proposed to NSW Incorporated Associations Legislation
The NSW Office of Fair Trading has released for public comment a draft of the revisions it is proposing to the NSW Incorporated Associations Act (1984). The new Bill, entitled Associations Incorporation Bill 2008 is the result of a comprehensive review to update the provisions of this legislation.
Among the changes being proposed is the introduction of reporting thresholds for these associations. Those with annual turnover above $200,000 (deemed large) will be required to lodge annual accounts with the Director General that must be prepared in accordance with Australian accounting standards and be audited. When lodged these statements must be accompanied by any resolutions made at the AGM about them and a summary of the association’s affairs in the format specified by the regulations. Lodgment within one month of the AGM and 7 months after the end of the previous financial year is required. Those below this threshold (deemed small) must still lodge their financial statements, AGM resolutions and financial affairs summary within the above timeframes, but need not have an audit. Associations will now also be required to have either a 30 June or 31 December year-end.
The Bill proposes, amongst other things:
- extending the commissioner's powers to require an association to change its name if it implies links to the Crown
- to include residency requirements and statutory duties of care and honesty for management committees
- to allow technology to be used for meetings at multiple venues
The term public officer is to be removed and replaced by the secretary whose role and responsibilities must be addressed in the association's constitution.
A copy of the media release, summary of changes and the draft legislation can be found here.
Submissions close on 11 April 2008 and the Institute urges its NSW members with clients affected by this legislation to review and comment to policy@oft.commerce.nsw.gov.au.
Alternatively, the Institute expects to prepare a submission in this regard and so comments can be emailed to techsubmissions@charteredaccountants.com.au by April 4 2008 for inclusion in our submission.
7. APRA and ASIC release new online reporting system for dual-regulated institutions
The Australian Prudential Regulation Authority (APRA) and Australian Securities and Investment Commission (ASIC) have released a new online system for dual-regulated institutions to report breaches. This system is intended to simplify the process of reporting breaches, and prospective breaches, of an APRA-administered or ASIC-administered Act, standard or rule, as well as other matters that may require reporting.
Primarily, the new system will enable:
- all APRA-regulated institutions (e.g. general insurers, life insurance companies, superannuation licensees etc.) to report breaches online to APRA
- institutions regulated by both APRA and ASIC to report breach notifications previously required to be lodged twice (once to each body), to now lodge just one electronic breach report to APRA
Further details are available on the APRA website.
Professional & Ethics News | |
8. APESB proposes withdrawal of Management Consulting Services Standard
At its February meeting, the Accounting Professional and Ethical Standards Board (APESB) agreed in principle to withdraw APS 8 ‘Statement of Management Consulting Services Standards’ (refer to ANT05/2008 for meeting highlights).
APS 8 was issued 24 years ago to communicate the requirements of the professional accounting bodies in relation to the provision of management consulting services. Significant changes in the business environment, together with the recent issue of APES 110 ‘Code of Ethics for Professional Accountants’ have effectively made this standard redundant.
APESB is seeking comments from interested parties who support or object to the withdrawal of this standard. Comments are requested by 18 April 2008. APS 8 and the media release can be found on the APESB website.
Not-for-profit accounting
Q: I am preparing some financial reports for a charity that is a reporting entity. Where can I find help on the application of accounting standards to this type of entity?
A: In 2007 the Institute published a report titled ‘Enhancing not-for-profit annual and financial reporting’. It followed and updated the 2006 publication of the findings of a research project to provide assistance to the not-for-profit sector in applying NFP reporting requirements. The previous report was titled ‘Not-for-profit sector reporting: a research project’ (pdf).
These two reports provide extensive guidance on NFP reporting and contain summaries of the relevant requirements that should assist NFPs in fulfilling their reporting requirements. Included is a set of specimen accounts and commentary on the application of accounting standards to these types of entities. For more information visit the Institute’s website.
The AASB has also published a staff paper which identifies all the special NFP requirements that are contained within the accounting standards and which explains the reasons for their existence. It also provides guidance to NFPs with “for profit” subsidiaries by comparing all the relevant different requirements which may impact their consolidation. The paper can be downloaded from the AASB website.
The AASB is currently engaged in a project to improve guidance for not for profit entities.
In June 2007 the Board released Invitation to Comment ITC 12 ‘A Proposed Revised Differential Reporting Regime for Australia and the IASB Exposure Draft of a Proposed IFRS for Small and Medium-sized Entities’ (pdf). The proposals require all entities (including not for profits) that prepare general-purpose financial reports to apply either full IFRS or the IFRS for SMEs based on public accountability criteria and size thresholds. Comments closed in September 2007 and the Board issued its feedback to the IASB in December 2007 to allow the IASB to progress this project. More details about ITC 12 are available on the Institute website.
The AASB also issued a further ITC in December 2007 which represents the next stage of the Board’s project to address the specific financial reporting needs of not for profit entities. ITC 14 ‘Proposed Definition and Guidance for Not-for-profits’ 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. Roundtables to discuss this ITC have been held over the last week (see ANT09/2008) and comments on this ITC are open until 31 March 2008. The ITC can be downloaded from the AASB website.
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.
26 March 2008
AASB – IFRIC Draft Interpretation D24 ‘Customer Contributions’
31 March 2008
AASB ITC 14 “Proposed Definition and Guidance for Not-for-Profit Entities”
4 April 2008
APESB ED 07/07 “APES 225 Business Valuation”
7 April 2008
AASB – IFRC Draft Interpretation D23 ‘Distributions of Non-cash Assets to Owners’
11 April 2008
NSW Office of Fair Trading Associations Incorporation Bill 2008 Exposure Draft
18 April 2008
APESB Notice to Withdraw APS 8 ‘Statement of Management Consulting Services Standards’
25 April 2008
IFRC Draft Interpretation D23 ‘Distributions of Non-cash Assets to Owners’
IFRIC Draft Interpretation D24 ‘Customer Contributions’
30 April 2008
APESB ED 01/08 “Compilation of Financial Information”
For further exposure drafts, refer to our exposure drafts webpage.
Audit Conference
Brisbane - Monday, 31 March - Tuesday, 1 April 2008
Sydney - Monday, 7 April - Tuesday, 8 April 2008
The only constant for the auditing profession is change. As standards, legislation and compliance issues continually evolve, this conference provides the latest facts, insights and opinions for auditing professionals.
Business Forum 2008
Throughout April, May and June in Brisbane, Melbourne, Sydney, Adelaide, Perth and Canberra. What’s your strategy for the year ahead? Join industry leaders and your peers as vital topics are addressed, key technical updates explored, and new ideas and options examined.
Audit of Self Managed Superannuation Funds Workshop
Throughout May and June in Brisbane, Melbourne and Sydney. Now that there are competency requirements for auditors of self managed super funds, don’t miss out on ensuring your audits are compliant with the regulatory requirements.
Please continue to help us to improve the newsletter by sharing your comments on articles featured in this newsletter, or any 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.
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