Accounting & Assurance News Today (ANT) Issue 04 - 8 February 2008

Welcome to the fourth 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.

Issue 04 8 February 2008 Institute News ED 160 draft Corporate Reporting Discussion Group - 18 February 2008 Institute needs another consultant Financial Reporting News AASB meeting update IASB meeting update IPSASB Convergence Project update Auditing & Assurance News IFAC guide to applying international standards on auditing to SME audits Professional & Ethics News APESB meeting Query of the week Changes to audit report wording (part 2) ED comment closing dates Training & Development Your Input

1. ED 160 draft submission now available

The Institute of Chartered Accountants has drafted a submission on ED 160 'Exposure Draft of Proposed Amendments to AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards and AASB 127 Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate'. Overall, we support the proposed amendments, although we do have some significant concerns with the detail of some of the amendments.

The draft submission can be viewed at the Institute website and member feedback is welcome. Please email any comments to the Tech Submissions team. The final submission will be sent to the AASB on 13th February 2008.

2. Corporate Reporting Discussion Group - 18 February 2008

The Institute is hosting the next Sydney Corporate Reporting Discussion Group (formerly Sydney CABs Discussion Group) meeting on Monday 18 February 2008 at its Sydney office at 33 Erskine Street, Sydney.

The meeting will be chaired by David Southwell, Senior Manager for Group Reporting at Insurance Australia Group. Kerry Hicks, Head of Reporting at the Institute, and Andrew Stringer, Head of Audit at the Institute, will be guest speakers for this forum.

Kerry and Andrew plan to inform members of what the Institute is doing on their behalf in the financial reporting and assurance arenas, as well as highlighting the programs of work relating to financial reporting and assurance topics that members are encouraged to become involved with:

• AASB activities, including the progress on SME reporting and field testing results
• Institute lobbying activities with the new government
• interaction of management with auditors and audit committees, including expectation gaps, value proposition and independence
• the Standard Business Reporting initiative and how it will impact corporates
• open discussion of other accounting and auditing issues that are being faced by corporates, with a view to including these as agenda topics in the future

The lunchtime meeting will begin at 12.30pm at the Level 1 Conference Centre and conclude at 2:00pm. If you wish to attend this forum, please send your name, member number, position and organisation to the Tech Submissions team.

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3. Institute needs another Consultant

The Institute is looking for another Reporting and Assurance Consultant - at a manager or senior accountant level - who will be able to assist the current team in providing technical assistance to our members. This includes nominating relevant issues, as well as analysing, researching for, and preparing submissions on key accounting and auditing matters. The position could be based in Sydney or Melbourne and flexible hours are available.

For further details, see the Institute website.

4. AASB meeting update

The Australian Accounting Standards Board (AASB) meeting was held in Melbourne on 7 February 2008. Highlights of the meeting included:

Measurement of defined benefit obligations for superannuation funds
The Board discussed and compared measurement models based on AASB 119 Employee Benefits in contrast to an exit value model. While there seemed to be a preference for superannuation funds to measure defined benefit obligations based on AASB 119, the Board agreed to continue to explore an exit value model.

Cost of investment draft submission to IASB (ED 160)
The Board noted that only one response had been received on this issue to date; however, the closing date for submissions is 13 February 2008 and therefore more responses are expected. A number of issues associated with the proposal were discussed for inclusion in the International Accounting Standards Board (IASB) response letter.

Interpretations
The Board approved the following draft interpretations released by the International Financial Reporting Interpretations Committee (IFRIC) last month for release for comment in Australia:

• IFRIC D24 Customer Contributions
• IFRIC D23 Distributions of Non-cash Assets to Owners

Revised AASB 3 Business Combinations and AASB 127 Consolidated and Separate Financial Statements
The Board deferred approval of the revised AASB 3 and AASB 127 until its March meeting so that it can consider the implications for not-for-profits, the interaction with existing Australian interpretations and the impact of the scope inclusion of contracts by combination alone.

Amendment to AASB 2 Share-based Payment
The Board approved for issue the revised AASB 2 which incorporates the amendments made by the IASB issued last month Vesting Conditions and Cancellations - Amendments to IFRS 2 Share-based Payment.

Non-exchange income
The Board agreed to further explore a short-term project with New Zealand on making modifications (quick fixes) to IPSAS 23 Revenue from Non-exchange Transactions (Taxes and Transfers).

5. IASB meeting update

The most recent meeting of the Board was held on January 22-24 in London and the update summarising decisions of the Board is now available on the IASB website.

• Revenue recognition - the board continued its discussions of differing models for revenue recognition
• Financial instruments - discussion of proposed questions to be included in the discussion paper to be issued jointly by FASB and the IASB on this topic
• Liabilities & equity - the board discussed the draft of the ITC on this issue, which it expects to publish by March 2008
• Related party disclosures - the Board continued its redeliberation of the responses received to the Exposure draft of proposed amendments to IAS 24 relating to a proposed exemption for state-controlled entities
• Earnings per share - the Board continued discussions on its earnings per share project and instructed staff to prepare an exposure draft of proposed changes to IAS 33
• IFRS 5 - the board is to prepare an ED to clarify the scope of IFRS 5, as it relates to the disclosure requirements for non-current assets or disposal groups classified as held for sale or discontinued operations
• ED on puttable financial instruments and obligations arising on liquidation - the Board concluded its deliberations on this ED and expects to issue the amendments to IAS 39 shortly
• Insurance contracts - the Board held an education session on aspects of insurance reporting to further its current project

6. IPSASB Convergence Project update

The International Public Sector Accounting Standards Board (IPSASB) is close to finalising two new standards as part of its project to converge IPSASs with the equivalent International Financial Reporting Standards (IFRSs), as issued by the IASB. The forthcoming IPSAS 25, Employee Benefits, will cover reporting requirements for employee benefits by public sector entities, including a number of public sector specific issues. The second new standard, IPSAS 26, Impairment of Cash-Generating Assets, will set out the procedures for reporting on impairment losses on assets held by public sector entities for primarily commercial reasons.

IPSASs 25 and 26 are planned to be effective for reporting periods beginning on, or after, January 1, 2011 and April 1, 2009 respectively. Further information will be posted on the IPSASB home page in the coming weeks, once the standards have been released.

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7. IFAC guide to applying international standards on auditing to SME audits

IFAC's Small and Medium Practices (SMP) Committee commissioned this guide, the first in a series of implementation guides, to assist SMPs and other auditors of small and medium entities (SMEs) in applying International Standards on Auditing to the audit of SMEs. The guide provides a detailed analysis of the standards and their requirements in the context of an SME audit. It is available at no charge, and practitioners should find it to be of practical benefit.

It may be obtained through the IFAC website.

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8. APESB meeting

The next meeting of the APESB will be held on February 12 2008 in Sydney. Items to be discussed include:

• Finalisation of amendments to the auditor independence requirements exposed late last year
• Draft ED on revised version of APS 9 Compilation of financial reports
• Proposed project plans to revise APSs on insolvency, taxation, management consulting and trust accounts

The agenda can be viewed on the APESB website.

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Changes to audit report wording (part 2)

Q: I've noticed some audit reports contain additional wording in respect of IFRS compliance compared to that included in the original version of ASA 700. Has there been an omnibus amending the standard affecting ASA 700?

A: Yes. In late June 2007, the AUASB issued omnibus Auditing Standard ASA 2007-1 which effects changes to ASA 700 "The Auditor's Report on a General Purpose Financial Report" . The changes were applicable to audit reports signed and dated on, or after, 1 July 2007 (i.e. 30 June 2007 year ends).

The amendments:

• provide for an alternative form of audit report where financial statements include a statement of IFRS compliance made under AASB 101, which has the objective of improving recognition of IFRS compliance in financial reports; and
• alter the wording in the audit report in relation to internal control issue to clarify the director's responsibilities

Consequential amendments have also been made to a number of other Auditing Standards - ASAs 200, 210, 510, 570,701, 710, 800 and ASRE 2410. Compiled versions of all the amended standards can be downloaded from the AUASB's website.

A compiled version of ASA 700 incorporating AASB 2007-1 is also available in the online members handbook and is included in the new version of the Institute's Auditing and Assurance handbook - see the Institute website.

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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.

13 February 2008
AASB ED 160 Proposed amendments to IFRS 1 and IAS 27 - Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate

15 February 2008
AUASB ED Proposed ASAE 3100 "Compliance Engagements"

26 February 2008
AASB ED 161 Proposed Amendments to AASB 2 and AASB Interpretation 11, Group Cash-settled Share-based Payment Transactions

29 February 2008
AASB ED 161 Proposed Amendments to AASB 2 and AASB Interpretation 11, Group Cash-settled Share-based Payment Transactions

17 March 2008
IASB ED Proposed Amendments to IFRS 2 Share-Based Payment and IFRIC 11 IFRS 2-Group and Treasury Share Transactions

31 March 2008
AASB ITC 14 "Proposed Definition and Guidance for Not-for-Profit Entities"

For further exposure drafts, refer to our exposure drafts webpage.

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Accounting Conference
Through March and April in Brisbane, Melbourne, Sydney & Perth
Get ahead in financial reporting and management accounting by covering new developments in accounting standards AASB 7, AASB 3, IAS 27 and reporting on governance and risk activities.

Accounting & Auditing for the Aged Care Industry Seminar
Throughout March in Brisbane, Melbourne, Sydney, Adelaide & Perth.
Are you an accountant or auditor for the aged care industry? Acquire essential information and advice to fully interpret relevant accounting standards for your business, clients and staff.

Audit Conference
Throughout April in Brisbane and Sydney
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.

New Employees Workshop 2008
Throughout February in Brisbane, Melbourne, Sydney, Parramatta, Newcastle, Tamworth & Albury. Five day workshop.
Give your new employees the practical experience and real-life skills they need to deliver professionally at the New Employees Workshop.

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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.

Accounting & Assurance News Today is an initiative of the Reporting and Assurance Team of the Institute of Chartered Accountants in Australia.

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Disclaimer

This is an initiative of, and has been prepared by the Reporting and Assurance Team of the Institute of Chartered Accountants in Australia. While every effort has been made to ensure the accuracy of the information contained 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 specific standard.

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