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Welcome to the fifth 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. ED 160 submission lodged with the AASB and IASB
The Institute of Chartered Accountants this week lodged with the Australian Accounting Standards Board (AASB) and International Accounting Standards Board (IASB) its 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, the Institute supports the proposed amendments, although with some significant concerns in connection with the detail of some of the amendments. The proposed mandatory impairment testing of an investment following the payment of a dividend is, in the Institute's view, unduly onerous.
The submission is available for download from the Institute website.
2. ED 161 draft submission now available
The Institute of Chartered Accountants has drafted a submission on ED 161 Exposure Draft of Proposed Amendments to AASB 2 Share-based Payment and AASB Interpretation 11 Group and Treasury Share Transactions - Group Cash -Settled Share-based Payment Transactions. Overall, we support the proposed amendments.
Comments are due at the AASB by 29 February 2008.
The exposure draft can be downloaded from the AASB website and the draft submission can be viewed at the Institute website.
3. Joint submission on long tail liabilities
Also lodged this week was a joint submission between the Institute and the National Institute of Accountants (NIA) to the Corporate Markets Advisory Committee (CAMAC) on the accounting issues associated with its discussion paper on long-tail liabilities. The submission supports the current accounting standard requirements in relation to existence, recognition, measurement and disclosure of long-tail liabilities. Further, it highlights the current international discussions occurring in relation to the area of non-financial liabilities, as they are relevant to CAMAC's work in this area.
A copy of the submission is available on the Institute website.
4. 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.
5. AASB action alert
Action Alert 111, which provides details of the Board's 8 February meeting, is now available for download from the
AASB website. The meeting outcomes were summarised last week in ANT04 (08/02/08).
Also available on the AASB website is the most recent edition of its e-newsletter "Transparency". The newsletter provides a summary of its open ED's and meeting dates (including the not-for-profit roundtable dates in March), introduces some of its key staff, and also provides updates on some of the major projects that the board is progressing during 2008. These projects include:
- the Board's plans to improve access to accounting standards electronically with the aim of making their standards more interactive and easy to use
- advice by the interpretations advisory panel that AASB Interpretation 12 Service Concession Arrangements does not specify the accounting to be adopted by government grantors of service concessions. While Interpretation 12 should be considered, the AASB says that these entities may be able to justify retention of their existing accounting policies concerning service concessions, at least until the International Public Sector Accounting Standards Board (IPSASB) work on the topic is completed
- its work in the area of providing guidance on the accounting for government grants and other non-exchange transactions, given the significant concerns expressed by not-for-profits regarding the effect on financial statements of the requirements of AASB 1004 contributions; and
- its work for the IASB on Intangibles.
The newsletter is available at the
AASB website.
6. Fed IASB meeting agenda
The IASB is meeting on 19th to 21st February 2008 at the IASB's offices in London. Its agenda covers the following topics:
- Annual improvements process
- Conceptual framework
- Insurance contracts
- Liabilities: amendments to IAS37
- Post-employment benefits
For further details on the running order, see the IASB website. Agenda papers can also be downloaded from there.
Auditing & Assurance News | |
7. IAASB amendments to international standards on review engagements
The International Auditing and Assurance Standards Board (IAASB) has amended its two international auditing standards on review engagements - ISRE 2400, Engagements to Review Financial Statements; and ISRE 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity.
Currently, ISRE 2410 applies to a review by the entity's auditor of interim financial information only, while ISRE 2400 applies to all reviews of historical financial information (excluding those conducted by the entity's auditor). ISRE 2410 has been amended to apply to reviews by the entity's auditors of historical financial information other than interim financial reports. ISRE 2410 is written so that the entity's auditors are able to use their audit-based knowledge of the entity when carrying out a review of any historical financial information.
The application of ISRE 2400 is now restricted to a review of any historical information performed by a practitioner who is not the entity's auditor.
These amendments will be effective immediately (1 February 2008), but for Australian audits, practitioners need to wait until they have been adopted by the AUASB. The amendments can be downloaded free of charge from the IFAC bookstore.
8. U.S. subprime mortgage crisis - effects on reporting
The Institute of Chartered Accountants in England and Wales (ICAEW) has prepared a range of resources, which will help preparers and auditors of financial statements to deal with the effects of the subprime mortgage crisis. Australian members may also find this information to be of benefit when dealing with clients.
The resources are available at the
ICAEW website.
9. ASIC stakeholder survey
Earlier this year, ASIC Chairman, Tony D'Aloisio, announced a strategic review of ASIC. As part of that review, ASIC is conducting an extensive survey of stakeholders. They are keen to hear your views about how ASIC performs and what you think ASIC should do over the next three to five years to meet the challenges ahead.
You can access the survey at
https://live.everyonecounts.com.au/app/336/328.
10. Federal Government to tackle complexity in financial services
As part of the Rudd government's plan to reform financial services disclosure requirements (as part of the Government's wider deregulation agenda), the Minister for Superannuation and Corporate Law Senator Nick Sherry and the Minister for Finance and Deregulation Lindsay Tanner MP recently announced the creation of a Financial Services Working Group. The Group will be made up of senior offices from Treasury, ASIC and the Department of Finance and Deregulation - and it is their role to examine key current issues associated with financial services advice and disclosure. This work will be done in conjunction with industry and consumer groups, investors, and regulatory bodies.
Initially, the Group will focus on determining the best possible approach to delivering short, comparable, financial disclosure documents and to determine an appropriate regulatory framework that facilitates the provision of financial advice in relation to the important decisions that investors make with regard to their superannuation.
The Working Group will commence its work immediately. For more details visit the
media release.
Professional and Ethics News | |
11. APESB meeting highlights - 12 February
Following are some brief notes from the recent meeting of the Accounting Professional & Ethical Standards Board (APESB), held on February 12 2008. An expanded document listing the highlights from the meeting will be published by the APESB in due course.
- Amendments to auditor independence requirements: APESB considered responses to the exposure draft ED 06/07 and agreed to the finalisation and release of these amendments to the Code of Ethics in line with the Corporations Act amendments, enacted in June 2007 by the Simplified Regulatory System (SRS) legislation. These amendments are to take effect from 15 February 2008.
- Insolvency: APESB agreed to the establishment of a taskforce to consider the revision of Miscellaneous Professional Statement APS 7 Statement of Insolvency Standards.
- Compilation of Financial Reports (formerly APS 9): APESB considered a redraft of a revision of the standard on compilation of financial reports (APS 9) and determined to consider further redrafting ahead of the planned release of an exposure draft.
- APS 8 Statement of Management Consulting Services Standards: APESB considered a proposal to withdraw APS 8. In principle, the Board supports the proposed withdrawal and intends to invite public comment on this proposal.
- Members in Business: APESB determined to set up a taskforce to consider revisions to Joint Guidance Note GN1 Members in Business Guidance Statement.
Corporations Act Breaches
Q: Does an audit qualification for non-compliance with accounting standards require notification to ASIC under Section 311 of the Corporations Act?
A: Yes, a notification to ASIC would usually be required in these circumstances.
Under Section 311(1)(a) of the Corporations Act, an auditor is required to notify ASIC if the auditor has reasonable grounds to suspect a contravention of the Act and they believe that the contravention is either significant or, if not significant, cannot be adequately dealt with by inclusion in the audit report or by bringing it to the attention of the directors.
ASIC's Regulatory Guide 34 "Auditors Obligations: Reporting to ASIC " (formerly know as practice note 34) provides detailed guidance on the application of this section of the Act. This guide states at paragraph 20 that one example of a likely significant breach is "a breach of accounting standards or the true and fair view requirement". This is on the basis that compliance with accounting standards is required by the Corporations Act (section 296) and therefore a breach (or suspected non-compliance) of an accounting standard is a breach (or suspected breach) of the Corporations Act.
Non-compliance with accounting standards is further discussed in paragraphs 33 to 35 of the Guide. This section states that an auditor's obligations to include breaches of accounting standards under section 308(2) and 309(2) do not relieve auditors from their reporting obligations under s 311. The practice note considers that departures from accounting standards would generally be either significant or, even if not significant, it might not be dealt with adequately in the audit report or by drawing it to the directors' attention and therefore should be reported under Section 311.
The Technical Standards team wrote an article in charter in 2005, which summarised the reporting responsibilities under s311. To access this article, visit the Institute website.
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 techsubmissions@charteredaccountants.com.au no later than one week before the closing date shown.
15 February 2008
AUASB ED Proposed ASAE 3100 "Compliance Engagements"
26 February 2008
IASB ED Proposed amendments to IFRS and IAS 27 - Cost of an investment in Subsidiary, Joint controlled Entity or Associate
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 and IFRIC 11
31 March 2008
AASB ITC 14 "Proposed Definition and Guidance for Not-For-Profits Entities"
For further exposure drafts, refer to our exposure drafts webpage.
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.
Audit Conference
Brisbane - Monday, 31 March - Tuesday, 1 April 2008
Sydney - Monday, 7 April - Tuesday 8 April 2008
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.
Audit Update and Audit of AFS Licensees Seminar
Throughout April in Brisbane, Melbourne, Sydney, Adelaide and Perth
Seminar one - Audit Update, Seminar two - Audit of AFS Licensees. Minimise risk by arming yourself with the vital knowledge and skills to effectively master challenges posed by new and existing audit regulations.
Business Forum 2008
Throughout April, May and June in Brisbane, Melbourne, Sydney, Adelaide, Perth and Canberra. What's your strategy for the year ahead? Join industry leaders and your peers as vital topics are addressed, key technical updates explored, and new ideas and options examined.
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.
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.
The information is this email is confidential to the named addressee and subject to copyright. No one else may read, print, store, copy, forward or act in reliance on all or any of this email or its attachments. If you are not the intended recipient, any use, reliance upon, disclosure or copying of this email is prohibited and unlawful. If you have received this email in error, please notify the sender. The Institute of Chartered Accountants in Australia (ABN 50 084 642 571) does not warrant that this email and any attachments are error or virus free and recommends that all attachments be checked for computer viruses.
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