Accounting and Auditing News Today (ANT) Issue No 33 - 24 August 2007

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

1. Institute appoints new manager of reporting

The Institute is pleased to announce that Kerry Hicks has joined us from August 23, 2007 in the position of Head of Reporting.

Kerry comes to the Institute after a very impressive career in financial reporting and auditing with Ernst & Young, including 2 years as a Principal in Global IFRS Services based in London. More recently, Kerry has been a Principal in the EY Technical Consulting Group in Sydney and is very well placed to lead the Institute's activities in the increasingly important area of financial and non-financial reporting.
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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.

The meeting will be chaired by David Southwell, senior manager for Group Reporting at Insurance Australia Group. There will be two guest speakers:

• Vaughn Campbell, Manager of Group Financial Instruments from Origin Energy Ltd, an early adopter of AASB 7 'Financial Instruments: Disclosures', will be speaking from an industry perspective
• Regina Fikkers, partner at PricewaterhouseCoopers will be leading discussion on the practical issues arising out of and concerning AASB 7

The Corporations Amendment (Insolvency) Act 2007 was assented to on 20 August 2007. The introduction of the bill through Parliament was announced in ANT22 (7 June 2007).

The changes arising from this will be improved outcomes for creditors, enhanced protections for employee entitlements and reduced procedural requirements. There is also a statutory pooling process to facilitate in the winding up of related companies. New powers will be given to ASIC resulting in an easier disqualification process for persons engaged in phoenix company activities.

Commencement information can be obtained from s2 of the Act. Full details can be obtained from column 2 of the table specified in s2.
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The International Valuation Standards Committee (IVSC) has released for comment a discussion paper on the "Determination of Fair Value of Intangible Assets for IFRS Reporting Purposes". The discussion paper aims to provide guidance in measuring the fair value of intangible assets, such as brands, licences, patents, know-how, customer contracts and customer relationships.

The comment period closes 31 October 2007. Comments obtained will assist the IVSC in developing firm proposals for an exposure draft to be issued in late 2007.
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The International Ethics Standards Board for Accountants (IESBA) is considering the implications of the International Auditing and Assurance Standards Board's (IAASB's) clarity project for the "Code of Ethics for Professional Accountants". The clarity project involves redrafting all international auditing standards to make them clearer and to promote their adoption and implementation.

The IESBA plans to approve an exposure draft on the implications of clarity redrafting to the Code of Ethics at its meeting in October 2007. For more information on the IAASB's clarity project, visit http://www.iaasb.org.
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The Professional Accountants in Business (PAIB) Committee of the International Federation of Accountants (IFAC) has released the publication "Internal Control from a Risk-based Perspective".

This paper contains interviews which help identify the nature of risk in organisations and demonstrates the importance of risk-based approaches to internal control. It is available for download free from the IFAC online bookstore.
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Q: My client used to be large, but under the new thresholds is now a small foreign controlled proprietary company. What effect will this have on its reporting requirements?

A: If your client is foreign controlled, the changes to the dollar thresholds will generally have no effect on its reporting requirements because these types of companies are still treated by the Corporations Act as being large. The only exception to this is if the small proprietary company 's financial statements are consolidated by an Australian company, registered scheme, disclosing entity or registered foreign company that lodges with ASIC (see section 292(2)(b).

ASIC has also provided class order relief to some of these entities exempting them from:

• the preparation and lodgment of financial reports (CO98/98)
• or auditing requirements (CO98/1417).

In early July ASIC issued class order 7/505 "Variation and revocation of financial reporting instruments" (refer ANT28- 19 July 2007) which revises the amounts in the 'large group' test in class order 98/98 to make these consistent with the revised small/ large thresholds. It also allows entities affected by the threshold changes 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 by this class order to enable registered foreign companies that are similar to small proprietary companies to be relieved from their reporting requirements.

For more details visit the ASIC website.
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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.

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"

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/ANT33_07_08_25.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.