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Welcome to the twenty-ninth 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. Institute lodges submission on Financial Instruments with Characteristics of Equity
The Institute and CPA Australia have lodged their joint submission on the IASB Discussion Paper Financial
Instruments with Characteristics of Equity.
The submission does not support the adoption of any of three proposals in the paper as a short term convergence
solution, suggesting that an improved version of IAS 32 Financial Instruments: Presentation is preferable.
However we consider a longer term project could explore further two of the proposals - being the basic ownership
model and the ownership settlement approach.
To view the submission, go to the
Institute website .
2. Institute lodges Tasmanian Associations Incorporation Act submission
The Institute and CPA Australia have lodged their joint submission on the Tasmanian Associations Incorporation Act
1964 – Proposal to Exempt Small Incorporated Bodies from Auditing Requirements.
The submission recognises the need for regulatory bodies to reduce the burden of compliance on small incorporated
bodies, whilst not compromising the requirement for accountability. Accordingly, two questions are addressed in this
submission:
- Whether the requirement to provide annual audited returns is necessary for all organisations
- Whether the requirement to provide annual audited returns is unduly onerous for small associations
The accounting bodies support the Tasmanian Department of Justice's proposals to exempt small associations from the
audit requirement, but suggest that the revenue threshold should be set higher, at $200,000 rather than $20,000. To
read the whole submission, go to the
Institute website.
3. What’s new in August Charter
This month’s issue of Charter includes: -
Our regular roundup of news in the financial reporting and audit and assurance spheres – ‘The Panel’ – by Roslyn
Hatton of the Institute’s Reporting & Assurance team (pages 70-71)
- A discussion of the accounting and reporting issues associated with financial guarantees – by Parveen Dhaliwal
of Ernst & Young (pages 64-65)
- A summary of all the developments in the auditing world which apply to 30 June 2008 – by Stephanie Kemp of the
Institute’s Reporting & Assurance team (pages 62-63)
- A brief overview of the Institute’s audit manual and toolkit by Anna Adamidis of the Institute’s Reporting &
Assurance team (pages 50-51)
4. Auditing Toolkit
The Australian Auditing Toolkit is a comprehensive Toolkit designed to supplement the Australian Auditing Manual and
is to be used as a practical tool to help you apply the Australian Auditing Standards. The Toolkit can be either
tailored to suit individual practices or left as is. The flexible Toolkit is aimed at helping practitioners conduct
high quality and cost effective audits.
For more information, visit the
Institute website .
5. AASB meeting highlights – 30-31 July 2008
The Australian Accounting Standards Board (AASB) held a joint meeting with the New Zealand Financial Reporting
Standards Board (FRSB) in Auckland this week. The following significant matters were discussed: -
IASB Conceptual Framework project – the Boards discussed the IASB Discussion Paper Preliminary Views of an
Improved Conceptual Framework for Financial Reporting: The Reporting Entity and the Exposure Draft on the
Objective of Financial Reporting and Qualitative Characteristics and Constraints of Decision-useful Financial
Reporting Information. Further discussion will take place at future meetings, once submissions have been
received from constituents. The Board also discussed the applicability of these documents to the not-for-profit
sector.
- International Public Sector Accounting Standards Board (IPSASB) Conceptual Framework Project – It was noted that
the IPSASB is soon to release a consultation paper on Phase 1 of the Conceptual Framework for the public sector.
Staff advised the Board of the differences identified between the IASB documents (noted above) and the IPSASB
document.
- Policy for Modifying IFRSs for not-for-profits – Currently both boards independently modify IFRS for
not-for-profit application. The staff presented the Boards with a paper recommending common criteria for the two
Boards to adopt when modifying IFRS for not-for-profit issues. The Board will discuss this further in future
meetings.
- Revenue recognition for non-exchange transactions – The AASB had previously agreed to work on a replacement to
AASB 1004 Contributions, applicable to the not-for-profit sector, as a modified version of IPSASB 23
Revenue from Non-exchange transactions (Taxes and Transfers). The staff presented to the Boards specific
examples of advance receipt transactions, addressed in the context of IPSASB 23 to determine if any modifications
were required in this area.
- Revised business combination standard as it applies to not-for-profits – The staff presented the Boards with
specific examples of not-for-profit merger transactions with a view to considering whether exemptions may be
applicable when applying the revised AASB 3 Business Combinations. The Boards requested staff to explore
this issue further.
- Emissions Trading Schemes – A status report was provided on both Australia and New Zealand proposals for
emission trading schemes. The AASB requested staff to prepare a paper outlining the process the Boards need to
undertake to address accounting for emissions in both the profit and not-for-profit sectors. The AASB will continue
with a ‘watching brief’ on the IASB project and once the staff paper is received by the Boards, they will discuss
the need for a contingency plan if the IASB project does not meet the timetable for issue of an accounting standard
in 2010.
- Service concessions in the public sector – The Boards reviewed the submissions received on ITC 16 and discussed
a draft submission to the IPSASB on accounting for Service Concession Arrangements in the public sector.
- Reporting Frameworks for SMEs – Staff from both the FRSB and AASB updated the Boards on the status of this
project in the respective jurisdictions.
- Related party disclosures – The AASB approved a project plan to consider related party disclosures for the
not-for-profit sector (including the public sector).
- Concise financial reports – The AASB noted its support for a recent Parliamentary Joint Committee report which
recommended the removal of the option in the Corporations Act for concise financial reporting. The staff also
advised that while concise financial reporting remained an option under the Act, the standard would require revision
from 1 January 2009 for AASB 8 Segment Reporting and AASB 101 Presentation of Financial Statements.
- Interpretations – Staff advised that the IASB has issued IFRIC 15 Agreements for Construction of Real Estate
and IFRIC 16 Hedges of a Net Investment in a Foreign Operation. These interpretations will be reviewed
and presented to the August AASB meeting for approval.
In addition:
- Warren McGregor, IASB Member, provided both Boards with an update of IASB activities and an education session on
the Financial Statement Presentation Project – Phase B, which is due out as a discussion paper in the third quarter
of 2008.
- Judith Downes, Standards Advisory Council member, gave an update on the activities and changes in the
composition of the SAC
- Mike Hathorn, chair of the International Public Sector Accounting Standards Board, gave an update of the
activities of this group.
6. AASB round table on ITC 17
The AASB is inviting participation in a roundtable discussion on ITC 17 on the ‘reporting entity’, to be held at the
Institute of Chartered Accountants in Australia offices in Melbourne on 14 August 2008. A copy of the roundtable
invitation and questions for discussion is available here.
The AASB is also seeking comments on the IASB’s Discussion Paper ‘Preliminary Views on an improved Conceptual
Framework for Financial Reporting: The Reporting Entity’. Comments are due 25 August 2008.
To download a copy of ITC 17, or register for the roundtable discussion, visit the AASB website.
7. IASC constitutional review advances
The International Accounting Standards Committee (IASC) is currently undertaking a five-year review programme of its
constitutional arrangements (refer to ANT22/2008
).
As part of the first stage of this review and after extensive consultation with interested stakeholders, the IASC
has now released for public comment a discussion paper entitled Review of the Constitution - Public
Accountability and the Composition of the IASB.
In this paper, the trustees are proposing to improve the transparency and accountability of the IASC to all its
stakeholders by: -
Establishing a monitoring group, comprising representatives of public authorities and international organisations
that have requirements for accountability to public authorities to which the IASC would report, and
- Expanding the IASB to 16 members and implementing new guidelines regarding the geographical diversity of the
composition of the IASB.
The Discussion paper is open for comment until 20 September 2008 and is available at the IASB website.
The IASC intends to complete Phase 1 of the constitutional review at its meeting in October and apply the changes
with effect from 1 January 2009. Further consultation will then occur on the next stage of the review.
8. IASB Expert Advisory Panel on the Measurement of Financial Instruments
The IASB has formed this panel in response to recommendations from its Financial Stability Forum. Its membership and
proceedings to date can be viewed on the IASB website.
The panel will provide input into the IASB’s work on financial instruments and fair value measurement.
9. Proposed national co-operatives legislation
Officials from each State and Territory are working together to develop a proposed National Cooperatives Law. The
proposed National Cooperatives Law is being based on the Queensland Cooperatives Act 1997. It is expected that the
legislation will address matters such as: -
The cooperatives principles
- Forming and registering a cooperative
- The legal capacity and powers of a cooperative
- Membership and rules
- Management of a cooperative
- Meetings, decisions and voting
- Shares and raising capital
- Mergers, assets transfers and winding up
- Insolvent cooperatives, arrangements and reconstructions
- Arrangements for foreign cooperatives
- Administration of the law, including the powers of the Registrar.
The cooperatives sector will be consulted about the proposed Cooperatives National Law before it is introduced.
Officials preparing the proposed law expect that draft legislation will be completed before the end of 2008.
The Office of Fair Trading in New South Wales maintains an email update service. You can subscribe to the service
using the National Cooperatives Law Update subscription form .
10. ASIC issues report on relief applications decided between December 2007 and March 2008
The Australian Securities and Investments Commission (ASIC) has released a report outlining its recent decisions on
applications for relief from the corporate finance, financial services and managed investment provisions of the
Corporations Act 2001 (the Act) between 1 December 2007 and 31 March 2008. In particular, section E of the
report deals with applications for relief from the financial reporting provisions of the Act.
A copy of the report is available on the ASIC
website .
What the Reporting and Assurance Team can do for you
Q. I've never used the Institute's Reporting and Assurance helpline before. Can you explain what services you
provide?
A. The Institute’s Reporting & Assurance Team provides a telephone and email enquiry service to assist our
members on financial reporting and auditing issues. It does not provide assistance on professional ethics,
independence, superannuation, financial planning or tax matters because these specialist practice areas are managed
by other sections within the Institute. For more information on these other services visit the technical,
professional and specialist page of the Institute website.
A summary of the features of our service is provided below:
What we can do
This free service aims to assist our members to access the technical resources that they need in the areas of
financial reporting and auditing (including the related aspects of the Corporations Act).
Our consultants are experienced professionals and are thus able to talk through the requirements of specific
standards, and also to point members to the availability of other resources that may assist them, so as to ensure
that their professional judgment on a topic is informed.
Where possible, members should have discussed their query with senior finance personnel in their organisation and
their auditors (if any) prior to contacting our service.
...and what we can't do
The Reporting & Assurance helpline does not provide opinions on the application of requirements to specific issues
that involve professional judgment. Consequently, the staff of our enquiry service cannot make subjective judgments
for members on accounting treatments applied to specific facts, and neither can they act as an arbitrator on any
issue (e.g. a dispute between a company and its auditor).
Where an opinion is required and members do not already have access to an appropriate member in practice, the
Institute can provide a list of members willing to provide such services for a fee.
The Institute is a member organisation and as such we will not ordinarily reply to any queries or requests for
information from non-members.
Response times
The Reporting & Assurance team’s resources are not dedicated to the inquiry service and are also committed to the
production of our ANT newsletter, Charter, the production of submissions on financial reporting and auditing
Exposure drafts and the technical support of a range of other Institute services and activities. Consequently, an
instantaneous response to queries is not always available.
However, a recent increase in the Institute’s resources in the Standards division should mean that your query will
be attended to within a maximum of 2 working days.
Contact details
Our service can be contacted by phone on (02) 9290-5702, or by email to RAhelpline@charteredaccountants.com.au. Please note the
change of email address to ensure our service is more readily identifiable by our members.
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.
1 August 2008
AASB ED 163 Proposed Amendments to AASB 1049 for Consistency with AASB 101
22 August 2008
AASB IASB Discussion Paper on Reducing Complexity in Reporting Financial Instruments
25 August 2008
AASB ED 164 An improved Conceptual Framework for Financial Reporting: The Objective of Financial Reporting and
Qualitative Characteristics and Constraints of Decision-useful Financial Reporting Information.
AASB ITC 17 Request for Comment on IASB Discussion Paper Preliminary Views on an improved Conceptual Framework
for Financial Reporting: The Reporting Entity
Parliament of Australia Senate Economics Committee: Inquiry into the Disclosure regimes for charities and
not-for-profit organisations
29 August 2008
AASB IASB Discussion Paper on Preliminary Views on Amendments to IAS 19 Employee Benefits
APESB ED 04/08 Forensic Accounting Services
This list does not represent a complete list of the exposure drafts on issue. For all other open exposure drafts,
refer to our dedicated exposure draft
website.
Australian Audit Manual
Training
Throughout September in Sydney, Melbourne, Parramatta, Adelaide, Perth and Brisbane. A step by step guide on how to
use the Institute’s new Audit Manual and walk away with a practical understanding of your auditor responsibilities.
CFO of the Future Intensive
Program
Throughout September in Adelaide, Perth and Brisbane. This two-day program supports aspiring and existing CFOs in
their pursuit of professional excellence focusing on a combination of concepts and practical applications.
Chartered Accountants Audit of Self
Managed Super Funds Workshop
Throughout October in Sydney, Melbourne, Adelaide, Perth and Brisbane. Addresses the latest legislation changes and
technical details in separate streams for business and practice. The need–to–know updates that will make a
difference to your growth.
Audit Conference 2008
DVD
Recorded at the conference in April 2008, view highlight sessions at your convenience, including fraud, audit
sampling, quality control, problem audit opinions and more.
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.
We welcome new subscriptions. To subscribe, unsubscribe or to update your mailing details, please visit the newsletters section
of the Institute website. Alternatively, you can email ant@charteredaccountants.com.au.
Accounting & Assurance News Today is an initiative of the Reporting
and Assurance Team of the Institute of Chartered Accountants in Australia.
Disclaimer
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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
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