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Welcome to the eighth 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. What’s new in Charter – March 2008
This month’s “Technical Focus” section of Charter discusses:
- Corporate Governance issues with Gail Bergmann of Ernst & Young
- the Standard Business Reporting project by Trevor Pyman, and
- the requirements of AASB 7 “Financial Instruments: Disclosures” by Louise Halliwell of PricewaterhouseCoopers, and also contains
- our regular roundup of Financial Reporting and Auditing news “The Panel”.
These articles can be found on pages 64-71 of the March edition of Charter.
2. Member’s Handbook – February update
The
Institute’s Member’s Handbook was updated on 25 February 2008 and includes new and revised accounting, auditing, professional and ethical standards released up to 15 January 2008.
The Institute adds to the online handbook every eight weeks, to keep members up-to-date on the latest changes. The CD-ROM version of the handbook automatically downloads these updates when they become available.
3. Certificates of Public Practice to undergo changes
The Institute is introducing changes to the CPP requirements effective from 1 July 2008.
Some members now require a CPP, when they did not previously. Similarly, some members who previously required a CPP, no longer have to have one.
Members are advised to go to this website and use the Institute’s
interactive guide to determine the effect these changes will have on them.
Further information can be found at http://www.charteredaccountants.com.au/cpp.
4. AASB meeting update – 5-6 March 2008
The Australian Accounting Standards Board (AASB) meeting was held in Melbourne on 5-6 March 2008. Highlights of the meeting included:
Business combinations
The Board approved the issue of a revised AASB 3 Business Combinations and a revised AASB 127 Consolidated and Separate Financial Statements, following the International Accounting Standards Board’s (IASB's) release of these standards in January 2008. The standards will be applicable for financial periods commencing 1 July 2009, although they will be available for early adoption by entities other than not-for-profit entities. The Board has not fully considered not-for-profit issues regarding these standards and has therefore prohibited early adoption until these matters are finalised.
Puttable Financial instruments
The Board approved the proposed amendments to AASB 101 Presentation of Financial Statements and AASB 132 Financial Instruments: Presentation as a result of the IASB's changes to the standards for puttable financial instruments. Essentially, this will mean that entities with limited lives (such as trusts) may be able to reclassify amounts received from members (such as unitholders funds) from liabilities to equity under specific circumstances.
Differential Reporting
The Board reconfirmed the direction regarding differential reporting in the for-profit sector. The first tier – those publicly accountable – would have to apply full IFRS, and the second tier – those not publicly accountable – would be required to choose one of these three options:
- full IFRS; or
- full IFRS recognition and measurement with limited disclosures; or
- IFRS for SMEs.
Discussions covered what the limited disclosures may look like; however, no decisions were reached. It was determined that the project be put on hold until the final IFRS for SMEs standard was released by the IASB. Areas the AASB will consider in the meantime include:
- the type of accounts required by grandfathered companies (given they are not publicly available); and
- the application of differential reporting to the not-for-profit and public sectors.
Emission rights
The Board had a closed education session on emissions and then discussed in the public forum what the direction of the AASB should adopt on this topic. It was noted that the IASB has recently reactivated its topic on emissions, although the timeframes on an anticipated new standard have not yet been released. The AASB decided to actively pursue the IASB in the communication of timelines, and if these timings are not suitable for the Australian marketplace, will then assess whether the AASB needs to develop some interim guidance on emissions.
Superannuations Plans and Approved Deposit Funds
The Board heard a presentation from actuaries, Tim Furlane and Andrew Boal, on the measurement of accrued/defined benefits by actuaries. They considered issues papers on disclosures relating to defined contribution benefits and investments and definitions. No final decisions were made.
Draft Interpretation D24 Customer Contributions
The Board discussed the staff paper on the timing of revenue recognition with a view to drafting a submission on the draft interpretation to the International Financial Reporting Interpretations Committee (IFRIC). Comment letters on this draft interpretation are due to the AASB by 26 March 2008 and to IFRIC by 25 April 2008.
Communication
The Board received a presentation regarding a proposed solution to the compilation challenge, the progress on the website improvement project and the extent of media received by the AASB over the last quarter.
5. IASB meeting agenda – 11-14 March 2008
The IASB will meet in London on 11-14 March 2008. The agenda includes discussion on the following items:
- IFRS for SMEs – staff will present the Board with a high-level overview of the responses to the ED and a draft work plan for the completion of the project
- Fair value measurement
- IFRS 1 “First-time adoption of International Financial Reporting Standards” – consideration of request to amend IFRS 1, taking into account transitional issues faced by adopting countries
- Financial statement presentation
- Extractive activities research project
- Analysis of ED comments
- Annual improvements process
- IAS 39 “Financial Instruments: Recognition and Measurement”
The agenda can be downloaded from the IASB website.
6. IASB discussion paper on financial instruments with equity characteristics
The IASB has commenced the first stage of a project to review IAS 32 “Financial Instruments: Presentation” with the release of a discussion paper on the distinction between equity and non-equity financial instruments. The project is a joint one with the US Financial Accounting Standards Board (FASB) and is a response to criticism by stakeholders that the principles in IAS 32 are difficult to apply and could lead to inappropriate classification of some financial instruments.
Comments on the discussion paper are open until September 5, 2008 and it can be downloaded from the IASB website by e-subscribers now and by all others after March 10.
7. Comparison between IFRS and US GAAP
This publication, by PricewaterhouseCoopers, is for those who wish to gain a broad understanding of the key similarities and differences between IFRS and US GAAP. It is an update of the October 2006 edition and takes into account all pronouncements issued under IFRS and US GAAP up to August 2007.
It can be downloaded from the PWC website.
Auditing & Assurance News | |
8. ED 1/08 Proposed ASAE 3500 Performance Engagements
The Auditing and Assurance Standards Board (AUASB) has issued an exposure draft of a new standard to replace AUS 806 Performance Auditing and AUS 808 Planning Performance Audits.
AUS 806 was directed towards auditors in the conduct of performance audits and AUS 808 was directed towards auditors in the planning for performance audits. Both AUS 806 and AUS 808 required the auditor to conduct performance audits in accordance with Australian Auditing Standards. However, the proposed ASAE 3500 has been developed as an adjunct standard to ASAE 3000 Assurance Engagements Other than Audits or Reviews of Historical Financial Information. Consistent with ASAE 3000, the proposed ASAE 3500 is directed towards the conduct of both performance audit and performance review engagements by assurance practitioners in accordance with ASAEs.
The ED can be downloaded from the AUASB website and comments are due by 15th April 2008.
9. ASIC and ASX issue disclosure guidance for listed entities
The Australian Stock Exchange (ASX) and Australian Securities Investments Commission (ASIC) have cooperated on the release of two Companies Updates to assist companies with meeting their disclosure obligations:
- Companies Update 02/08 provides guidance on the disclosure of material information relating to the financing arrangements of listed entities and the margin loans held by company directors
- Companies Update 01/08 provides guidance on the disclosure obligations of listed entities when they seek a trading halt or suspension of their securities
Both Companies Updates are available on the ASX website.
ASX and ASIC will work together to monitor disclosures and will take enforcement action where necessary to ensure that the market is fully informed.
Professional and Ethics News | |
10. APESB releases ED on compilation of financial information
The Accounting Professional and Ethical Standards Board (APESB) has released an exposure draft of APES 315 Compilation of Financial Information, which seeks to clarify the core responsibilities of professional accountants who collect, classify and summarise financial information. More specifically, this standard updates ethical and professional conduct provisions so as to align with the APES 110 Code of Ethics for Professional Accountants, and also updates the documentation requirements relating to terms of engagement and obligations in respect of performing, documenting and reporting on the work performed.
If approved, the standard will be effectual as of 1 January 2009 and will replace Miscellaneous Professional Standard APS 9 Statement on Compilation of Financial Reports.
The exposure draft can be downloaded from the APESB website. Comments are requested by 22 April 2008 and can be emailed to sub@apesb.org.au.
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Solicitors Trust Accounts
Q: Where do I find the regulations governing the audit of solicitors' trust accounts in NSW? I have heard that there have been some changes.
A: Changes to the solicitors’ trust account audit (external examinations) requirements were made in 2007 and the new requirements apply for years beginning on, or after, 1 April 2007. These audits are now called "external examinations" and practitioners no longer need to be registered company auditors in order to be able to conduct these. Instead, practitioners who conduct “external examinations” have to be accredited by the Law Society of New South Wales. Members of the Institute who hold a current certificate of public practice and who have completed an education course run by the Law Society can also be accredited.
All of the Law Society's information related to NSW solicitors' trust accounting is located at http://www.lawsociety.com.au/page.asp?partID=355 under the link to "External Examinations", or by emailing tcopas@lawsocnsw.asn.au.
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.
26 March 2008
AASB IFRIC Draft Interpretation D24 ‘Customer Contributions’
31 March 2008
AASB ITC 14 “Proposed Definition and Guidance for Not-for-Profit Entities”
4 April 2008
APESB ED 07/07 “APES 225 Business Valuation”
7 April 2008
AASB – IFRC Draft Interpretation D23 ‘Distributions of Non-cash Assets to Owners’
30 April 2008
APES ED 01/08 “Compilation of Financial Information”
This list does not represent a complete list of the EDs on issue. For all other open exposure drafts, refer to our dedicated
exposure draft website.
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.
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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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