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Welcome to the thirteenth 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. APES 225 Business Valuations submission lodged
The Institute of Chartered Accountants’ (the Institute) Business Valuation Committee has submitted a letter to the APESB in support of the proposed standard APES 225: Business Valuation.
The submission was supportive of the requirements and guidance contained in the ED and encouraged the APESB to release it as a standard as soon as possible.
The full submission can be viewed online at the Institute website.
2. IFRIC D23 Non-cash Dividends submission lodged
The Institute and CPA Australia have lodged their joint submission to the International Accounting Standards Board (IASB) and Australian Accounting Standards Board (AASB) on International Financial Reporting Interpretations Committee (IFRIC) Proposed Interpretation D23 Distributions of non-cash assets to owners.
The submission expressed concern that the nature and complexity of these types of transactions make the issue of an accounting standard by the IASB a much more suitable option to address and resolve the diversity of practice that exists internationally than the issue of an IFRIC with such a limited scope. However, as an interim measure to resolve the debate, the submission supported the IFRIC's alternative view of the taking of gains arising from these transactions to equity rather than profit.
3. Draft submission on NSW draft associations Bill
The Institute has drafted a submission on the NSW exposure draft Associations Incorporation Bill 2008 and encourages members with NSW association clients to read the summary of changes at the Office of Fair Trading website and make comments to the them.
Our draft submission can be found on the Institute’s website. Our preference would be for a uniform national approach to not-for-profit regulation rather than each State and Territory legislating independently. Please forward any comments you may have on our draft to techsubmissions@charteredaccountants.com.au.
4. Corporate Reporting Discussion Group – 21 April 2008
As advertised in last week’s ANT (ANT12/2008), the Institute is hosting the next Sydney Corporate Reporting Discussion Group (formerly Sydney AIFRS Discussion Group for CABs) meeting on Monday 21 April 2008 at its Sydney office at 33 Erskine Street, Sydney. The discussion topic will be on practical issues arising out of impairment in light of recent changes in Australia and internationally.
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 jane.ma@charteredaccountants.com.au by 16 April 2008.
5. AASB releases discussion paper on reporting for financial instruments
The AASB has released the IASB Discussion Paper on ‘Reducing Complexity in Reporting Financial Instruments’.
The Discussion Paper was released by the IASB in March for the express purpose of assisting preparers of financial statements, their auditors and other users of financial statements who are finding the requirements for reporting financial instruments complex. The paper discusses some of the main causes of complexity, as well as possible intermediate and long-term approaches to improving financial reporting and reducing complexity.
Comments are due to the AASB by Friday 22 August 2008, with comments due to the IASB by 19 September 2008. Constituents are asked to respond to both the AASB and IASB documents.
The Institute will be preparing a submission on this discussion paper, which will be available on our website in draft form in due course. Members are encouraged to prepare their own submissions to the AASB but are welcome to forward comments for inclusion in the Institute submissions to techsubmissions@charteredaccountants.com.au prior to Friday 8 August 2008.
6. New SBR website and Business Advisory Forum
The Federal Government has recently launched a new website www.sbr.gov.au as part of its Standard Business Reporting Programme. This project is aimed at reducing the regulatory burden on business by standardising and reducing the communication between business and government.
Additionally – and as announced on this new website – SBR is establishing a new Business Advisory Forum, which seeks to help SBR stay in touch with the needs of Australian businesses and their intermediaries. The forum comprises representatives from industry groups and professional associations, including the Institute. The Forum meets for the first time on April 15, 2008.
For more information about the Forum, including a list of other members and the terms of reference, visit the SBR website.
7. IASB meeting agenda – 15-18 April 2008
The IASB’s next meeting is in London on 15-18 April 2008. The agenda includes discussion on the following items: - Amendments to IAS 39 Financial Instruments: Recognition and Measurement, Exposures Qualifying for Hedge Accounting
- Amendments to IFRS 5
- Annual improvements process
- Consolidation
- Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate (Amendments to IFRS 1 and IAS 27)
- Fair value measurement (education session)
- IFRS for small and medium-sized entities (SMEs)
- Joint Ventures
- Liabilities: Amendments to IAS 37
- Revenue Recognition
For a full copy of the agenda, go to the IASB website (pdf).
8. IFAC releases final Financial Reporting Supply Chain Report
In 2007, the International Federation of Accountants (IFAC) commissioned a project called the ‘Financial Reporting Supply Chain Project’ that focused on exploring the current state of financial reporting globally, whether or not it had improved in recent years, and whether it is now more relevant, reliable and understandable.
The final report from this project was published in March 2008 and is now available for viewing online. The full report is available on the IFAC website (pdf).
9. Trustees announce new appointments to enlarged IFRIC
In November 2007, the number of members of the International Financial Reporting Interpretations Committee (IFRIC) was increased from 12 to 14. The Trustees of the International Accounting Standards Committee (IASC) Foundation have now announced the names of their appointees to these positions. They are: - Margaret M. (Peggy) Smyth - Vice President, Controller, United Technologies Corp., United States
- Scott Taub - Managing Director, Financial Reporting Advisors, LLC, United States, and former Acting Chief Accountant and Deputy Chief Accountant, U.S. Securities and Exchange Commission
The appointments are for three years and will end on 30 June 2011. The two members will be eligible for reappointment. The expansion of the committee is designed to broaden the committee’s IFRS expertise.
For further details visit here.
10. AUASB meeting agenda – 14 April 2008
The next meeting of the Auditing and Assurance Standards Board (AUASB) will be held on 14 April 2008 in Sydney. Items to be discussed include: - ASAE 3100 Compliance Engagements
- ASA redrafting – ASA 240 The Auditor’s Responsibility to Consider Fraud in the Audit of a Financial Report
- Addendum to Guidance Statement – authorised deposit taking institutions
- Guidance Statement – audit implications of AASB 1049
- Project plans to revise or withdraw guidance statements
The agenda can be obtained from the AUASB website.
11. ASIC releases paper on online financial services disclosures
The Australian Securities and Investments Commission (ASIC) has released a consultation paper seeking feedback on its proposals to allow greater use of email and internet in the provision of financial services information under parts 7.6-7.9 of the Corporations Act.
ASIC has recognised that both financial consumers and product issuers are increasingly using electronic means of communication. Moreover, online information has the potential to make disclosure more interactive and innovative, as well as delivering cost savings for businesses in meeting legal requirements. In response it has developed guidance on the use of these technologies and is seeking the feedback of consumers, product issuers and financial services professionals.
The consultation paper is available on the ASIC website (pdf) and ASIC invites comments on the proposals contained therein. Submissions should be emailed to policy.submissions@asic.gov.au by 28 May 2008.
Professional & Ethics News | |
12. IESBA independence revisions
The International Ethics Standards Board for Accountants (IESBA) has recently approved revisions to the independence requirements in the Code of Ethics resulting from its December 2006 exposure draft. Revisions include providing a definition of “public interest entities” and extending the listed entity provisions to all public interest entities. Additionally, the IESBA are also currently considering comments received on its July 2007 independence exposure draft. These proposed revisions cover the provision of internal audit services, relative size of fees from an assurance client, and contingent fees.
Comments received on the exposure draft can be viewed at on the IFAC website.
These changes would be expected to be included in the next revision of Australia’s independence requirements by the APESB.
Classification of members’ shares in co-operatives
Q: A number of my clients are co-operatives. I have heard that members' contributions must be classified as a liability under AASB 132, and not as equity. Is this correct?
A: There is certainly an issue to consider in relation to co-operatives, in particular trading co-operatives.
AASB 132 Financial Instruments: Presentation paragraphs 16 to 19 addresses the situation where the members’ share capital would be classified as a liability, and suggests disclosure of this. Under paragraph 16, a financial instrument is equity if – among other conditions – the instrument includes no contractual obligation to deliver cash or another financial asset to another entity. Therefore, the critical point as to classification of members' contributions is whether or not the co-operative has the discretion under the contract with its members to avoid making a payment.
Additionally, Interpretation 2 Members’ Shares in Co-operative Entities and Similar Instruments covers this issue. Under this Interpretation, a co-operative must consider all the terms and conditions of the financial instruments in determining classification as financial liabilities or equity. Member’s shares will be equity only if the co-operative has an unconditional right to refuse redemption of the members' shares. Where a co-operative has an obligation to cancel a membership for failure to meet the active membership test, and hence must then repay the member’s share capital, the members’ shares must be classified as a liability. This is regardless of whether any members currently fail the active membership test or how far in the future the payment may be.
The Institute has been advised that all Australian states and territories, except for Western Australia, have core provisions in their co-operatives legislation consistent with the NSW legislation, which is referred to in Interpretation 2. The Institute understands that matters relating to shares of co-operatives in WA are covered in a co-operative’s articles of association.
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.
15 April 2008
AUASB ED 1/08 ‘Proposed Standard on Assurance Engagements ASAE 3500 Performance Engagements’ (Revision of AUS 806 and AUS 808)
18 April 2008
APESB Notice to Withdraw APS 8 ‘Statement of Management Consulting Services Standards’
22 April 2008
APESB ED 01/08 ‘Compilation of Financial Information’
25 April 2008
IFRIC Draft Interpretation D23 ‘Distributions of Non-cash Assets to Owners’
IFRIC Draft Interpretation D24 ‘Customer Contributions’
16 June 2008
AASB ITC 15 Request for Comment on IPSASB Exposure Draft ED 34 ‘Social Benefits: Disclosure of Cash Transfers to Individuals or Households’ and IPSASB Consultation Paper ‘Social Benefits: Issues in Recognition and Measurement’
For further exposure drafts, refer to our exposure drafts webpage.
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.
Accounting for Income Tax Workshop
Throughout May and June in Brisbane, Melbourne, Sydney, Adelaide and Perth. Prepared by Deloitte, this workshop will equip you with knowledge and tools to apply to your work place. Build on your understanding of accounting for income taxes (AASB 112) and identify your obligations in time for the June 2008 year-end.
Audit of Self Managed Superannuation Funds Workshop
Throughout May and June in Brisbane, Melbourne and Sydney. Now that there are competency requirements for auditors of self managed super funds, don’t miss out on ensuring your audits are compliant with the regulatory requirements.
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.
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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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