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Welcome to the thirty-seventh 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.
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| Issue 37 | 26 September 2008
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1. Institute submissions on IFAC PAIB corporate governance EDs
The Institute has made submissions on International Good Practice Guide (IGPG) exposure drafts recently issued by the
International Federation of Accountants (IFAC) Professional Accountants in Business (PAIB) Committee.
The first is on Costing to Drive Organisational Performance, and our main point relates to the need for the paper to guide
the practical application and specifically to enable the reader to choose the most appropriate costing methodology for their
situation as guided by the principles. The paper can be downloaded from the IFAC website and the submission here.
The second is on Evaluating and Improving Governance in Organisations and our comments relate to the paper’s focus on
governance to create and optimise stakeholder value.
In general we feel the IGPG needs to cover the IFAC code of ethics requirement for professional accountants to act in the public
interest. This is specifically relevant to corporate governance where the key purpose is to provide accountability and preserve
stakeholder confidence. The paper can be downloaded from the IFAC website and the submission here.
2. Institute lodges IASB 19 employee benefits submission
The Institute has lodged its submission on the International Accounting Standards Board (IASB) Discussion Paper Preliminary Views on
Amendments to IAS 19 Employee Benefits.
The Institute supports the elimination of the ‘corridor method’, which allows the smoothing of actuarial gains and losses. This
method increases complexity and reduces comparability and results in financial statement balances that do not reflect the
substance of the arrangements in place.
3. Sydney Corporate Reporting Discussion Group – 13 October 2008
The Institute is hosting the next Sydney Corporate Reporting Discussion Group meeting on Monday, 13 October 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. The topic for
the discussion will be ‘Developments in Not For Profits (NFPs) – What’s going on?’ The guest speakers are still being finalised,
however they will include Regina Fikkers, Partner, PriceWaterhouseCoopers. The discussion will cover recent developments for the
NFP sector including:
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Senate Economics Committee Inquiry into the Disclosure regimes for charities/NFP
- ITC 14 - Proposed Definition and Guidance for Not-for-Profit Entities
- Status on treasury proposals made in 2007 on limited by guarantee companies
The lunchtime meeting will begin at 12.30pm at the Level 1 Conference Centre and conclude at 2:00pm. Members who wish to attend
this forum are now able to register online on the Institute’s website at http://www.charteredaccountants.com.au/eventid=A121946590 by Wednesday, 8 October 2008. For any
queries, please email crdg@charteredaccountants.com.au.
Please note registration is essential as seating is limited and numbers will need to be finalised as soon as possible. A catered
lunch will be served upon arrival.
4. Melbourne Corporate Reporting Discussion Group meeting highlights – 24 September 2008
The Institute’s Melbourne Corporate Reporting Discussion Group met for the first time on Thursday 25 September 2008 to discuss
carbon emissions measurement and reporting as well as the implications for business. David Barton, Senior Manager of
Sustainability & Climate Change at PriceWaterhouseCoopers and Neil Perry, Chairman of Renewtek were the guest speakers for this
forum.
David provided an outline of the National Greenhouse Energy Reporting Scheme (NGERS) and the Carbon Pollution Reduction Scheme
(CPRS). He explained the requirements of each scheme and the implications for businesses. He emphasised that businesses needed to
calculate their emissions to identify whether they will be impacted by the limits of either scheme and to ensure their reporting
of emissions was consistent across all reports released. Specific assurance and accounting guidance is being developed for
emissions reporting but David advised that currently there are four main variations in the accounting for emissions permits.
Neil explained Renewtek’s journey to become Australia’s first carbon neutral professional services company under the Government’s
Greenhouse Friendly program. His key messages were that it was easy, inexpensive, good exposure, inevitable and for businesses to
expect more to come. Over 50% of Renewtek’s emissions arose from their accommodation, entertainment and flights, which they had
found surprising for an IT firm. Neil felt that achieving carbon neutral status was important for them to appeal to prospective
employees in generation X and Y, as well as giving the firm an advantage when competing for business.
5. AASB meeting update – 24 September 2008
The Australian Accounting Standards Board (AASB) met on 24 September 2008. The following outlines the key areas of discussion.
Superannuation Plans and ADFs
The Board discussed the draft exposure draft and asked that the staff make several amendments for consideration at a future Board
meeting. Tentative decisions included: -
retain approach that other standards apply
- move some material from Application Guidance to the body of the ED
- include a core principle outlaying the objective of reporting the information
- disallow a straight line basis of attributing benefits in circumstances where materially higher benefits are accrued near
retirement age
Amendments to AASB 1049 (ED 163)
The Board considered responses received and agreed to issue the accounting standard AASB 2008-9 Amendments to AASB 1049 for
Consistency with AASB 101, with applicability on or after 1 January 2009 subject to some minor amendments.
Interpretations
The updated version of AASB 1048 Interpretation and Application of Standards was approved by the Board subject to some
minor amendments.
GAAP/GFS Harmonisation
The board decided that the approach to GAAP/GFS harmonisation for entities within the General Government Sector (GGS) should
differ from that adopted in AASB 1049 Whole of Government and General Government Sector Financial Reporting. The Board
agreed that an exposure draft should be prepared that proposes amendments to AASB 101 Presentation of Financial Statements
to apply to all entities within the GGS. This is to address the Financial Reporting Council’s directive to harmonise GAAP and
GFS.
Conceptual framework/Reporting Entity
The AASB’s draft submission to the International Accounting Standards Board’s (IASB) Discussion Paper Preliminary Views on an
improved Conceptual Framework for Financial Reporting: The Reporting Entity was discussed, having regard to the comments
received on ITC 17 and the conceptual framework roundtable in August, and will be considered further at the next Board meeting.
To download the AASB action alert, go to the AASB
website.
6. AASB publishes new standards
Following approval at the last AASB meeting (see ANT33/2008, item 4), the following new standards and interpretations are now available on the AASB website:
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AASB 2008-8 Amendments to Australian Accounting Standards – Eligible Hedged Items, applicable for periods commencing from
1 July 2009
- Revised AASB 1039 Concise
Financial Reports, applicable for periods beginning on or after 1 January 2009, with early adoption permitted. It
includes changes to terminology and descriptions of the financial statements to achieve consistency with that used in AASB 101
Presentation of Financial Statements, as well as the changes to the disclosure requirements relating to segments to
achieve consistency with the equivalent requirements in AASB 8 Operating Segments. Early adoption is only permitted provided AASB
101 and AASB 8 are also applied to the periods.
7. IASB SME project webcast
On 10 September 2008, the IASB conducted a webcast progress report on their Small and Medium Enterprises (SME) project, now
called the proposed International Financial Reporting Standard (IFRS) for Private Entities. The presentations can be downloaded
from the IASB website. About 1,000 people registered for the two sessions and many participants submitted questions.
The slides clarify the reasons for the project and the history of its development through the consultation process so far.
The key decisions made by the Board and Staff start on slide 11and include: -
Historic cost should be the default measurement. Apparently it always was, but this will be made more explicit, via the
“reliability exception” for financial assets and agriculture. The term “fair value” will be replaced by a clear description of
what has to be measured
- Goodwill may be amortised as well as tested for impairment
- Staff have recommended a “taxes payable” approach to income tax, but this has yet to be approved by the Board
- Some form of consolidation is likely to be included but is still being debated
- Some form of simplified share-based payment – but not intrinsic value – will be included
- What to do about pensions is still being debated
- Recent debt/equity changes will be included
Training materials are being developed and will be free of charge.
A vote on a final standard is expected at the end of this year, with the standard being issued in the first quarter of 2009 – but
it is up to individual jurisdictions when they choose to apply it.
8. IASB releases two new EDs on discontinued operations and first-time adoption
The IASB has published for public comment an exposure draft (ED) of
proposed amendments to IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. The proposals are to revise
the definition of discontinued operations and require additional disclosure about components of an entity that have been disposed
of or are classified as held for sale. The proposals are the result of a joint project by the IASB and the US Financial
Accounting Standards Board (FASB) to develop a common definition of discontinued operations and require common disclosures about
them. The FASB is publishing parallel proposals to amend its standards. Comments are open until 23 January 2009.
In addition, the IASB has also released for public comment an ED
of proposed amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards. The proposals
address the retrospective application of IFRSs in selected areas and are aimed at ensuring that entities applying IFRSs will not
face undue cost or effort in the transition process. Comments are due until 23 January 2008
9. IASB update on response to credit crisis and draft report on measuring Financial Instruments in Inactive markets
The IASB has released an update on a variety of projects that address the issues raised by the current credit crisis. The full
press release can be viewed on the IASB website.
In response to the recommendations of the Financial Stability Forum in their report Enhancing Market and Institutional
Resilience, the IASB formed an expert advisory panel. The IASB consulted with members of this panel to identify practices that
experts use for measuring and disclosing financial instruments when markets are no longer active.
A draft document [PDF], entitled IASB Expert Advisory Panel: Measuring and disclosing the fair value of
financial instruments in markets that are no longer active summarises the discussions of the panel and provides useful
information and educational guidance for measuring and disclosing fair values.
The IASB welcomes feedback from interested parties on the draft document. Please send any suggestions about the document to
Hilary Eastman by email at heastman@iasb.org by 3 October 2008.
10. Extra IASB meeting scheduled
The IASB has decided to hold an extra meeting on 2 October 2008 to discuss potential amendments to IFRS 7 Financial Instruments:
Disclosures and a revised staff draft of a forthcoming exposure draft of a standard on consolidation. These projects have been
fast tracked following the recommendations of the IASB’s Financial Stability Forum. The exposure draft on consolidation should be
available in the last quarter of 2008.
For further details go to the IASB
website.
Auditing & Assurance News | |
11. SMSF audit report and Q&A released by the ATO
The Australian Taxation Office (ATO) has released a Self-Managed Superannuation Fund (SMSF) independent auditor’s report that includes instructions for approved
auditors who have also been appointed by a trustee of SMSF to give a report on the operation of that fund for each income year.
The report applies from 1 July 2008.
The ATO has also released “Auditing a self-managed super fund – questions and statements to consider when auditing a self-managed
superannuation fund (SMSF)”. It can be viewed on the ATO website.
Professional & Ethics News | |
12. IESBA proposes clarifications to Code of Ethics
The International Ethics Standards Board for Accountants (IESBA) invites comments on proposals to clarify the Code of Ethics.
Comments are invited on the Exposure Draft (ED)
Code of Ethics for Professional Accountants, which seeks to enhance clarity and understandability of the provisions
contained in the Code. Comments are requested by 15 October 2008 and should be emailed to edcomments@ifac.org.
To keep abreast with the activities of the IESBA, see the IESBA’s
website.
Revisions to APS 1 now effective
Q: I’ve heard that APS 1 Conformity with Accounting Standards and UIG Consensus Views has now been replaced by APES 205
Conformity with Accounting Standards and that the new pronouncement is operative from 1 July 2008. Does this mean the new
standard is applicable to financial statements prepared for 30 June 2008 year-ends?
A: Yes. The new APES 205 Conformity with Accounting Standards was issued in December 2007 to replace APS 1 as the
guidance applicable to members involved in the presentation, preparation, audit, review or compilation of general and special
purpose financial statements. It was the Accounting Professional & Ethical Standards Board’s (APESB) intention that it should
apply to any financial statements, with which members are involved, produced on or after 1 July 2008 (i.e. 30 June year end
reports). This intent was confirmed on 2 June 2008, when the APESB announced the formal withdrawal of APS 1 effective from 1 July
2008 (refer ANT21/08).
The new APES 205 updates APS 1 for the changes in the financial reporting framework that have occurred since 1995 when APS 1 was
last issued (e.g. force of law accounting and auditing standards etc.). It has also been updated for changes in the requirements
of both the accounting standards and the new Code of Ethics now contained in APES 110.
Changes which have the potential to impact the preparation of financial statements for this financial year include:
- Requirement in paragraph 6.1 of APES 205 that members involved in producing special purpose financial statements take all
reasonable steps to ensure that the statements make it clear that they are special purpose reports, specify the purpose behind
their preparation and provide a summary of significant accounting policies (APS 1 required a list of the standards and UIGs
applied); and
- Revision of the definition of the reporting entity concept to align it with accounting standards, so removing the anomalies
associated with small foreign-owned entities (see Q&A in ANT 20/08)
A copy of the new APES 205 is available in the Member’s
Handbook and on the APESB 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 Institute (techsubmissions@charteredaccountants.com.au) no later than one
week before the closing date shown.
Note – this email address should not be used for technical queries. For this purpose, use rahelpline@charteredaccountants.com.au.
26 September 2008
IASB Preliminary Views on Amendments to IAS 19 Employee Benefits
29 September 2008
IASB FASB Exposure Draft An improved Conceptual Framework for Financial Reporting: Chapter 1: The Objective of Financial
Reporting and Chapter 2: Qualitative Characteristics and Constraints of Decision-useful Financial Reporting Information)
IASB FASB Consultation Paper Preliminary Views on an improved Conceptual Framework for Financial Reporting: The
Reporting Entity
3 October 2008
IASB draft report IASB Expert Advisory Panel: Measuring and disclosing the fair value of financial instruments in markets that
are no longer active
15 October 2008
AUASB ED 9/08 Proposed ASA 230 Planning an Audit of a Financial Report
AUASB ED 10/08 Proposed ASA 300 Planning an Audit of a Financial Report
AUASB ED 11/08 Proposed ASA 540 Auditing Accounting Estimates, including Fair Value Accounting Estimates and Related
Disclosures
AUASB ED 12/08 Proposed ASA 560 Subsequent Events
AUASB ED 13/08 Proposed ASA 570 Going Concern
AUASB ED 14/08 Proposed ASA 600 Special Considerations – Audits of a Group Financial Report (including the Work of Component
Auditors)
20 October 2008
AASB ED 165 Improvements to Australian Accounting Standards
31 October 2008
AASB ED 166 Simplifying Earnings per Share: Proposed Amendments to AASB 133
This list does not represent a complete list of the exposure drafts on issue. For all other open exposure drafts, refer to
our dedicated exposure draft website.
Chartered Accountants Technical
Conference
Throughout October in Sydney and Melbourne. Addresses the latest legislation changes and technical details in separate
streams for business and practice. The need–to–know updates that will make a difference to your growth.
Chartered Accountants Audit Essentials
Workshop
Throughout November in Sydney, Parramatta, Melbourne, Adelaide, Perth and Brisbane. Find out which hot spots ASIC will be
targeting, ensure you can address them, and get the latest updates on auditing standards and regulatory requirements.
Chartered Accountants Accounting Update
and Accounting and Audit of Registered Clubs
Throughout November and December in Sydney, Melbourne, Adelaide, Perth and Brisbane. These seminars will bring you
up-to-date for end of year reporting and the intricacies of accounting and auditing for registered clubs.
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.
We welcome new subscriptions. To subscribe, unsubscribe or to update your mailing details, please visit the newsletters section of the
Institute website. Alternatively, you can email ant@charteredaccountants.com.au. Please note that this email address should not be used for technical
queries.
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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