Accounting and Auditing News Today (ANT) Issue No 28 - 19 July 2007

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

This week's ANT is being sent out today due to the Institute's Head Office move.

1. Institute's Technical Enquiries Helpline closing temporarily for Institute move

The Institute's Head Office is moving to 33 Erskine Street, Sydney over the weekend of 21-22 July, reopening on 23 July 2007.

As a result, the Institute's Technical Enquiry Service (phone and email) will be closed from 12pm Thursday 19 July 2007 until 9am Tuesday 24 July 2007.

For more information on the move visit http://www.charteredaccountants.com.au/33_erskine_street.
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As reported in ANT25 (29 June 2007) the AASB has now released AASB 2007-7. This standard makes minor amendments to Australian Accounting Standards AASB 1, AASB 2, AASB 4, AASB 5, AASB 7 and AASB 128. It is the second omnibus to implement the changes proposed in ED 151 to align our standards with IFRS, as exposed in ED 151, and follows the release of AASB 2007-4 in April.

AASB 2007-7 applies to financial reporting periods ending on or after 1 July 2007 but may be applied to earlier periods. This means that entities can choose to early adopt this standard but if they do so it must be adopted in its entirety.

In addition the AASB has continued to release compiled versions of standards affected by AASB's 2007-4 and 2007-7. Compiled versions of AASBs 1, 108, 110, 112, 114, 116, 117 and 118 are now available on the AASB website, to accompany compiled versions of AASB's 107, 120,127, 128,131 and 136 released last month.
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The AUASB has now issued revised materials on assurance engagements and also the first in its new series of Guidance Statements.

• Revised framework for assurance engagements

• ASAE 3000 Assurance Engagements other than Audits or Reviews of Historical Financial Information

• New Guidance statements

Guidance statements are issued by the AUASB in order to assist auditors in the performance of their duties, providing explanatory material and suggested procedures that the AUASB believes will assist them in complying with the requirements of the auditing standards. Guidance statements do not create new mandatory requirements and the auditor should exercise his or her professional judgment in their use. They are operative from date of issue.

Copies of all these documents are available on the AUASB website.
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The ATO has issued the audit report for the 2007 year. The format has been revised to comply with the revised auditing standards. Download the self managed superannuation funds (SMSF) audit report.
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The AASB held Insurance Roundtables in Sydney and Melbourne on 7 and 8 June 2007. Notes on the discussions are available on the AASB website.
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The Australian Securities and Investments Commission (ASIC) has issued Class Order 07/505 Variation and revocation of financial reporting instruments to amend existing ASIC relief to reflect the recent changes in the 'large/small test'.

The changes affect certain small proprietary companies controlled by foreign companies and registered foreign companies.

It revises the amounts in the 'large group' test that provide the small foreign controlled entities with reporting relief to make these consistent with the changes in the small/ large test and also allows affected entities an extension of time to lodge the relevant application. Previously the relief required directors resolutions and the lodgement of Form 384 three months before the financial year end (class order 98/98), however for financial years ending 28 June 2007 to 30 June 2008, the revised class order allows Form 384 to be lodged by four months after year end or 31 October 2007, whichever occurs first.

Similar modifications have been made to the thresholds contained in Declaration 02/1432 that enable registered foreign companies that are similar to small proprietary companies to be relieved from their reporting requirements. The amended relief will be available where a financial report has not yet been lodged for the 2007 calendar year and all of the conditions of CO 02/1432 are met.

Click here for further details and other minor consequential changes made by the class order.
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Chris Pearce, Parliamentary Secretary to the Treasurer, has consented to the ASIC entering in to a cooperative audit oversight arrangement with the US Public Company Accounting Oversight Board (PCAOB).

The proposed arrangement between ASIC and PCAOB is facilitated after the enactment by the Government of the Australian Securities and Investments Commission Amendment (Audit Inspection) Act 2007. The Act provides a legislative framework to empower ASIC to enter into cooperative audit oversight arrangements with foreign regulators, with the consent of the minister.

View the media release.
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The Australian Prudential Regulation Authority (APRA) has released a paper setting out its response to submissions on its proposals on securitisation, which incorporates the new Basel capital adequacy regime called Basel II framework and market developments.

The final draft Prudential Standard APS 120 Securitisation sets out the general requirements applying to the involvement of an authorised deposit-taking institution (ADI) in securitisation activities, as well as the methodology for calculating an ADI's credit risk regulatory capital requirements for securitisation exposures.

Comments to the response paper and final draft of APS 120 can be sent to basel2@apra.gov.au by 10 August 2007. View the media release.
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The APRA has released details of proposed changes to capital requirements for authorised deposit-taking institutions (ADI) and general insurers (GI) in a discussion paper. The changes arise from the adoption of the Basel II Capital Framework in Australia.

The changes are incorporated in draft Prudential Standards APS 110 Capital Adequacy and APS 111 Capital Adequacy: Measurement of Capital. A number of these amendments will be carried over to Prudential Standard GPS 110 Capital Adequacy to maintain consistency between ADIs and GIs.

The discussion paper is open to comment till 30 July 2007 and submissions should be sent to capital@apra.gov.au. View the media release.
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Q: I understand that the IASB's interpretations committee (IFRIC) and the AASB publish rejection notices for issues referred to them that they do not consider need formal interpretation, giving reasons. What status do these have and how can I search them to see if they deal with topics I have a concern about?

A: Both the AASB and the IFRIC reject items proposed to them for various reasons and these rejection statements are posted on their respective websites. While the rejections have no status in their own right, it would be a brave preparer or auditor who decided that a standard should be interpreted in a way that one of the interpretations committees had decided was inappropriate.

AASB rejections are found at its website with the Interpretations under "Items Not Taken onto the Agenda". IFRIC also publishes its rejection statements on its website.

All IASB rejection statements issued prior to December 2004 and between February 2005 and March 2007 are available. Drafts of the items the Board intends to formally reject at its next meeting are also posted each month to allow comments prior to the completion of the rejection process. They are also summarised in the IFRIC updated produced after each IFRIC meeting. The AASB has recently commenced a similar process and is now publishing drafts of agenda items it proposes to reject at its next meeting on its website.

To help our members, the Institute website also includes all the local and international rejections in its technical resources section. The notices can be found analysed on a standard by standard basis under Financial Reporting/Analysis of AASB Standards/Interpretations and Guidance.

Further information on the status of international rejection statements and the process of deciding whether an item goes on IFRIC's agenda for interpretation can be found in Ruth Picker's article in Charter, May 2007. The Australian interpretation process was described by the technical standards team in Charter, August 2006, page 60.
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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@icaa.org.au.

30 July 2007
APRA draft Prudential Standards APS 110 Capital Adequacy and APS 111 Capital Adequacy: Measurement of Capital discussion paper

31 July 2007
ISA 250 (redrafted) 'The Auditor's Responsibilities Relating to Laws and Regulations in an Audit of Financial Statements'

3 August 2007
Treasury discussion paper - Financial reporting by unlisted companies
(see survey)

10 August 2007
APRA Prudential Standard APS 120 Securitisation

17 August 2007
AASB ED 155 "Financial Reporting by Whole of Governments
Supplement to ED 155

31 August 2007
APES ED 03/07 "Proposed Amendment to Network Firms in Section 290: Independence - Assurance Engagements of APES 110 Code of Ethics for Professional Accountants"

1 September 2007
AASB SME ITC "A Proposed Revised Differential Reporting Regime for Australia and the IASB Exposure Draft of a Proposed IFRS for Small and Medium-sized Entities"

3 September 2007
AASB ED 156 "Proposals Arising from the Short-term Review of the Requirements in AAS 27, 29 and 31"

14 September 2007
APES ED 04/07 "Terms of Engagement"

15 September 2007
ISA 200 (revised and redrafted) 'Overall Objective of the Independent Auditor, and the Conduct of an Audit in accordance with International Standards on auditing'
ISA 500 (redrafted) 'Considering the Relevance and Reliability of Audit Evidence'

5 October 2007
IFRIC D21 'Real Estate Sales'

26 October 2007
AASB ITC 13 'Preliminary Views on Insurance Contracts'

16 November 2007
IASB Discussion Paper "Preliminary Views on Insurance Contracts"

Technical Query Service
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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TECHNICAL/XFILES/ARTICLES/ANT/ANT28_07_07_19.doc. The Technical Standards team comprises, Jeanette Dawes CA, Roslyn Hatton CA, Stephanie Kemp CA, Claire Locke CA, Andrew Stringer; Benjamin Lau and Jane Ma - Technical Standards Assistants.