Accounting and Auditing News Today (ANT) Issue No 34 - 31 August 2007

Welcome to the thirty-fourth 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.

1. AASB meeting agenda - 5-6 September 2007

The next Australian Accounting Standards Board (AASB) meeting will be held in Melbourne on 5-6 September 2007. Issues to be discussed include:

• Insurance contracts
• Differential reporting and SME's (ITC 12) - consider roundtable discussions
• Draft Interpretations
• Definitions in relation to the review of AAS 25 "Financial Reporting by Superannuation Plans"
• Revisions to AASB 101 "Presentation of Financial Statements"
• Whole of Government GAAP including the consideration of responses to ED 155
• Definition of not-for-profit entities
• Proposals in the IASB Annual Improvements

Next week's ANT will be sent on Thursday 6th September, as Friday 7th September is a public holiday in Sydney due to the APEC conference.
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In early June, Treasury released the "Financial Reporting by Unlisted Public Companies" Discussion Paper canvassing the possibility of exempting smaller unlisted public companies from the financial reporting and auditing requirements of the Corporations Act in the same way as small proprietary companies.

The discussion paper raised the possibility of allowing companies limited by guarantee that fall below a prescribed size threshold not to lodge audited financial reports with Australian Securities Investment Corporation (ASIC).

The Institute has now lodged its submission on these proposals which has now been prepared in consultation with the NIA and CPA Australia.

The submission supports the introduction of differential lodgement which would eliminate the need for entities under a prescribed threshold to prepare general purpose financial reports. However it also encourages Treasury to set up some form of governance structure for these smaller unlisted public companies to maintain public accountability. The submission includes the views of members who responded to an online survey published in mid July and we are very appreciative of those members who took the time to participate.

A copy of the submission is available on our Institute website.

The AASB has also placed onto its website a copy of its submission to Treasury on this discussion paper.
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The Institute of Chartered Accountants is hosting the next Sydney AIFRS Corporate Discussion Group Meeting on Monday 3 September 2007 at its new Sydney offices at 33 Erskine Street, Sydney NSW 2000.

Unfortunately, Vaughn Campbell from Origin Energy who was advertised in ANT33 (24 August 2007) to give an industry perspective on AASB 7 is now unable to attend. Regina Fikkers, partner at PricewaterhouseCoopers will still be leading discussion on the practical issues arising out of and concerning AASB 7.
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The Institute has recently released the DVD of its national audit conference held in June this year. It includes discussion on:

• The new legally enforceable auditing standards
• The mandatory requirements of APES 320 Quality Control for firms
• Independence issues for audit, review and other assurance engagements
• Requirement of risk and fraud standards
• Corporations Act - directors' and auditors' obligations.
• Superannuation Industry (Supervision) Act

For more details visit the special Institute website.
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The International Financial Reporting and Interpretations Committee (IFRIC) has issued a media release clarifying some inaccurate assessments made by some market commentators on IFRIC 14 "IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction".

IFRIC 14 was released in July 2007. View the IASB media release.
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The next IFRIC meeting will be held in London on 6-7 September 2007. Issues to be discussed include:

• IAS 27 "Consolidated and Separate Financial Statements" - Accounting for non-cash distributions
• IAS 18 "Revenue" - Customer contributions and guidance on identifying agency requirements
• IFRS 2 "Share-based Payment" - group cash-settled share-based payment transactions
• Recommendations, review and update on Tentative Agenda Decisions
  • IAS 18 "Revenue"
  • IAS 19 "Employee Benefits"
  • IAS 39 "Financial Instruments: Recognition and Measurement"
  • IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations"

This month's technical focus section of Charter includes:

• Our regular roundup of recent developments in the financial reporting and auditing sphere - the Panel
• An article by Lee White of ASIC explaining the main changes introduced by the recently enacted Corporations Legislation Amendment (Simpler Regulatory System) Act 2007 which are now in force
• An article by Colin Parker on the new Segment Reporting standard AASB 8 and
• An article by Nick Ridehalgh of PricewaterhouseCoopers on sustainability reporting

Q: ANT28 (19 July 2007) recently announced the release by the ATO of new SMSF audit reports. Do these reports apply to the current financial year (ie. years ending 30 June 2007)?

A: Yes. The new reports are to be used for financial years ending on or after 30 June 2007 as they have been amended to conform with the new auditing standards which are applicable to this financial year. It should be noted that these revised standards are legally enforceable in respect of Corporations Act audits, and must be used on audits of SMSFs.

The ATO application dates of 1 July 2007 refers to the date when the audit report is signed.

The 27 August 2007 edition of Retirement Alert Today (RAT) contained useful guidance on the audit of SMSFs.

It included:
Work Programs for the Audit of SMSFs
Last year the Institute sent a disk to members containing work programs for the audit of self managed superannuation funds. This material is available on the website along with a new file which contains some recommended updates to reflect the new legislation. Refer to the Updated Work Programs.
IMPORTANT: before using the above work programs, please check this document, which contains changes and updates, current to July 2007
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Audit of Self Managed Superannuation Funds Workshop
Throughout October in Adelaide, Sydney, Brisbane, Melbourne & Perth 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.

Regional Roadshow
Running in 10 key regional centres throughout October 2007, the Regional Roadshow is a two-day event that provides the very latest changes and strategies for tax, accounting and auditing.

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.

Technical Conference
Sydney 8 - 10 Oct, Melbourne 8 - 10 Oct. Day 2: Auditing. Examine force of law, AIFRS, APES 320 and the latest technical issues and developments. Take away timely and practical solutions for immediate implementation.
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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.

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

12 September 2007
PAIB (IFAC) "Preface to IFAC's International Management Accounting Statements and International Good Practice Guidance"

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'

1 October 2007
IASB Exposure Draft of a Proposed IFRS for Small and Medium-sized Entities

5 October 2007
IFRIC D21 'Real Estate Sales'

15 October 2007
IESBA ED "Proposed Revised Section 290 of the Code of Ethics for Professional Accountants, Independence - Audit and Review Engagements, and Proposed Section 291, Independence - Other Assurance Engagements" 19 October 2007
IFRIC D22 'Hedges of a Net Investment in a Foreign Operation'

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

31 October 2007
IASB proposed IFRS for SMEs field test questionnaires

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

30 November 2007
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'
ISA 220 (Redrafted) 'Quality Control for an Audit of Financial Statements'

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/ANT34_07_08_31.doc. The Technical Standards team comprises, Jeanette Dawes CA, Roslyn Hatton CA, Kerry Hicks CA, Claire Locke CA, Stephanie Kemp CA, Andrew Stringer; Benjamin Lau and Jane Ma - Technical Standards Assistants.