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Welcome to the forty-sixth 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. Joint submissions on proposed amendments to IFRS 7
The Institute of Chartered Accountants in Australia, CPA Australia Limited and the National Institute of Accountants (the joint accounting bodies) have
jointly lodged a submission to the International Accounting Standards Board (IASB) and Australian Accounting Standards Board (AASB) on the proposed
amendments to IFRS 7. We generally support the majority of the proposals as they will provide more relevant and reliable information about fair value and
liquidity risk to the users of the financial statements, however we have made additional comments in relation to reducing the burden on entities.
The submission can be downloaded on the Institute website – AASB submission and IASB submission.
2. Sydney Corporate Reporting Discussion Group – 8 December 2008
The Institute is hosting the Sydney Corporate Reporting Discussion Group meeting on Monday, 8 December 2008 at its Sydney office at Level 1, 33
Erskine Street, Sydney.
The meeting will be chaired by David Southwell, Senior Manager of Group Reporting at IAG. This session will discuss the recent changes to the financial
instruments standards as a result of the current global economic downturn. The guest speakers will be Andrew Gilder (Partner) and Lee Roche (Executive
Director) from Ernst & Young’s Financial Services Division.
The session will address the topic ‘Financial Instruments: Where Are We Up To?’, which covers:
- the latest developments in accounting for financial assets (the AASB 2008-10 changes)
- the debated issue about whether Fair Value is pro-cyclical and thus contributed to the current market crisis, including feedback from the recent G20
summit
- Impacts for December annual and interim reporting
The lunchtime meeting will begin at 12.30pm and conclude at 2:00pm. If you wish to attend this forum, you should register online by Wednesday 3 December 2008.
If you have any questions regarding the forum, please email crdg@charteredaccountants.com.au.
3. ASX/ASIC Financial Reporting Update Seminar
On Tuesday 25 November, the Institute hosted a financial reporting update seminar in Sydney presented by Darren Collins, Senior Advisory, Issuers and
Accounting Policy from ASX and Doug Niven, Deputy Chief Accountant from ASIC. The event was organised by the Institute’s NSW Corporate Advisory Panel and
well attended by financial reporting staff of listed companies and their advisors.
ASX and ASIC provided an outline of respective financial reporting obligations and an update on recent developments and issues. Darren reminded the audience
of the continuous disclosure obligations and the need to meet the ASX reporting deadlines. In his presentation, Doug explained that ASIC had completed their
review of 30 June 2008 filings and were contacting some entities regarding impairment, fair value matters and also in relation to off balance sheet
arrangements.
Doug indicated that these should remain focuses for directors and auditors at 31 December 2008 in addition to going concern, disclosures of judgements and
estimates under AASB 101 Presentation of Financial Statements, AASB 7 Financial Instruments: Disclosures and current/non-current disclosures of
assets and liabilities. In particular some disclosures appeared to be minimal or potboiler disclosures. In the current economic climate, revenue recognition
and deferral of expenses would also have increased focus.
The presentation slides will be available on the Institute website soon.
4. 10 new compiled AASBs and a new AASB 1048
The AASB has released on its website ten new compiled standards to complete the set of
standards applicable to the 2008/09 financial year:
- New standards updated for AASB 2007-9 and applicable for reporting periods beginning on or after 1 July 2008:
- AASB 3 Business Combinations
- AASB 5 Non-current Assets Held for Sale and Discontinued Operations
- AASB 101 Presentation of Financial Statements
- AASB 114 Segment Reporting
- AASB 116 Property, Plant and Equipment
- AASB 127 Consolidated and Separate Financial Statements
- AASB 137 Provisions, Contingent Liabilities and Contingent Assets
- New standard updated for 2008-4 and applicable for reporting periods beginning on or after 30 June 2007 that end on or after 30 June 2008:
- AASB 124 Related Party Disclosures
- New standards updated for 2008-10 and applicable for reporting periods ending on or after 1 July 2008:
- AASB 7 Financial Instruments: Disclosures
- AASB139 Financial Instruments: Recognition and Measurement
In addition, AASB 1048 has been reissued and applies to annual reporting periods ending on or after 30 September 2008.
5. IPSASB October Board meeting summary
What follows is a brief outline of the key issues discussed by the International Public Sector Accounting Standards Board (IPSASB) at its October meeting. A
more detailed summary is available on the IPSASB website (PDF).
Conceptual Framework Group 2 Definition and Recognition of Elements
The IPSASB considered developments relating to the definition and recognition of elements and noted that the Paper should, amongst other things, discuss the
elements and their role in meeting the objectives of accountability and decision-making, and discuss the definition of ‘elements’
A further draft of the Paper is scheduled to be considered at its February 2009 meeting.
Performance Reporting
The IPSASB considered a project brief for a new project on performance reporting in the public sector. The project brief will be reconsidered in May 2009.
Process for Reviewing and Modifying IASB Documents
The IPSASB made some amendments to the internal guidelines for modifying IASB documents for the public sector so as to enhance its application. The
guidelines establish rules applied by staff for identifying when a public sector issue warrants departure from IFRS.
Financial Instruments
In light of the unfolding global economic crisis, the IPSASB considered that – as a matter of urgency – it should develop IPSASs based on IAS 32 Financial
Instruments: Presentation, IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures.
The IPSASB believes that developing standards for recognition and measurements of financial instruments and related disclosures is an important contribution
towards having a robust set of accrual-based accounting standards for the public sector.
Social Benefits
The IPSASB considered the response to Exposure Draft (ED) 34 Social Benefits: Disclosure of Cash Transfers to Individuals or Households. Owing to the
lack of support from the majority of respondents for the development of a standard based on ED 34, the IPSASB will not proceed with this project.
Long Term Fiscal Sustainability
In light of the overall support from the public on the project brief, the IPSASB agreed to proceed further. The project aims to produce a high level,
principles-based framework.
Agriculture
The IPSASB considered a preliminary draft of an ED titled Agriculture, which was drawn from IAS 41 of the same name. The IPSASB decided that the ED
should be closely converged with IAS 41. The ED is projected to be issued in the first quarter of 2009.
Intangible Assets
The IPSASB considered a preliminary draft of an ED titled Intangible Assets, which is intended to converge with IAS 38 of the same name. The IPSASB
agreed on the changes required to determine the scope, terminology and examples before approving the ED for publication.
Service Concession Arrangements
The IPSASB considered responses to the Consultation Paper Accounting and Financial Reporting for Service Concession Arrangements and noted an overall
support for the proposals, with additional guidance and clarification required on certain issues.
Further discussion will take place at the February 2009 meeting and the IPSASB plans to consider an ED in May 2009.
The next IPSASB meeting will be held on 23-26 February, 2009.
6. IASB updates reclassification amendment for financial instruments
The IASB has issued an updated version of the recent amendments to IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial
Instruments: Disclosures (issued on 13 October 2008) to clarify the effective date of the amendments.
The clarification was published in the October issue of IASB
Update and it has now been incorporated in the amendments.
Download the amendments on the IASB website.
7. Advertisement for IASB Board members
The IASB is seeking a number of board members over the next 3 years to serve a 5-year term, with eligibility for renewal for a further 5 years. The role is
full-time and based in London.
Board members are charged with developing and agreeing new accounting standards that can be used globally. It is a senior and prestigious appointment that
demands not only a high level of technical accounting expertise, but also a high level of understanding of the global economic environment.
Interested parties should reply by 15 December 2008 with full details to Spencer Stuart.
For further details and a full job advertisement and specifications, see the IASB website.
Auditing & Assurance News | |
8. Agenda for AUASB meeting 1 Dec 2008
The agenda for the Auditing and Assurance Standards Board’s (AUASB) December meeting can be downloaded from their website. Items to be covered include:
-
ASA redrafting project progress update
- Redrafting ASAs in detail -
- ASA 100 Preamble to AUASB Pronouncements
- ASA 260 Communication with Those Charged with Governance
- ASA 230 Audit Documentation
- ASA 300 Planning an Audit of a Financial Report
- ASA 540 Audit of Accounting Estimate, Including Fair Value Accounting Estimates and Related Disclosures
- ASA 560 Subsequent Events
- ASA
570 Going Concern
- ASA 600 Audits of a Group Financial Report
- Consideration of ASA redrafting Exposure Drafts ED 23/08 ASA 530 Audit Sampling and ED 24/08 ASA 610 Using the Work of Internal
Auditors
The AUASB is also hosting a Consultative meeting on 2 December 2008 to engage with stakeholders. Topics to be discussed include the Clarity Project, applying
auditing standards in the SME/SMP environment, greenhouse and energy reporting and assurance, and public sector assurance matters. The Institute will be
participating in this meeting. Please provide feedback on matters you may wish to see raised with the AUASB to techsubmissions@charteredaccountants.com.au.
9. APRA proposes revised audit requirements for ADIs
The Australian Prudential Regulation Authority (APRA) has released a consultation package outlining proposed revisions to its requirements for the external
auditor of an authorised deposit-taking institution (ADI). APRA is proposing to amend APS 310 Audit and Related Arrangements for Prudential Reporting
in order to account for changes in ADI group structures, developments in audit-related prudential standards applied to other APRA-regulated institutions, as
well as changes in ADI prudential reporting requirements flowing from the introduction of the Basel II Capital Framework in Australia.
The package is accessible on the APRA website. The final standard is
set to be released in December 2008 and will become effective on 1 January 2009. Interested parties are invited to comment on the proposed package by 30
November 2008.
10. Treasury DP on Prescribed Private Funds (PPFs)
The Federal Treasurer announced in the 2008 Budget that the Government will legislate guidelines to improve the integrity of Prescribed Private Funds (PPFs)
and to provide the trustees of PPFs with greater certainty as to their philanthropic obligations.
This commitment is to be achieved by amending and legislating the PPF guidelines to, among other things, ensure regular valuation of assets at market rates
and increase the size of compulsory distributions. The Commissioner of Taxation will also be given greater regulatory powers.
For further details go to the Treasury website.
Professional & Ethics News | |
11. APES 345 – prospective financial information
The Accounting Professional and Ethical Standards Board (APESB) has issued APES 345 Reporting on Prospective Financial Information prepared in connection
with a Disclosure Document.
APES 345 sets out the principles and mandatory requirements for members in public practice to comply with when undertaking engagements to prepare a report
on, or in connection with, prospective financial information included in a disclosure document.
Primarily, the standard addresses:
- Public interest obligations
- Professional independence
- Relationships that create threats to the fundamental principles
- Provision of other professional services
- Documentation and reporting
- Communication with those charged with governance
APES 345 replaces Professional Statement F.2 Prospectuses and Reports on Profit Forecasts and will be effective for engagements commencing on, or
after, 1 July 2009, with early adoption permitted.
The standard can be viewed in full on the APESB website (PDF).
Audit Clarity Project
Q: I understand that the AUASB is in the process of changing all the recently issued legally enforceable auditing standards again. Can you explain why
the change is occurring?
A: The AUASB is currently in the process of revising and reissuing all its auditing standards that were given the force of law under the Corporations Act
for financial periods commencing on or after 1 July 2006. This is in response to the recently completed “Clarity” project undertaken by the International
Auditing and Assurance Standards Board (IAASB), initiated in 2004, to improve the consistent application of International Auditing Standards worldwide.
The revised and redrafted Australian Auditing Standards (ASAs) will use the equivalent “Clarified” International Standard on Auditing (ISA) as the underlying
standard and will conform with the equivalent ISAs, issued by the IAASB.
It is now essential under Australia’s international harmonisation policies for the AUASB to complete our own “Clarity” project, which is being referred to as
“ASA redrafting in Clarity Format”.
The IAASB clarity project involved a review of all its ISAs in the interests of improving the clarity of wording, and implementing new drafting conventions
with the intention of making the standards easier to apply consistently. It focused particularly on ensuring that the responsibilities of the professional
accountant are clearly stated and that the standards are well structured. Much of the impetus for the project came from observations of international
regulators that the standards as drafted gave rise to some ambiguity, which detracts from the IAASB’s desire to facilitate the adoption of international
auditing standards worldwide as the authoritative standards on auditing.
While some of the IAASB standards have simply been redrafted, in other cases the opportunity was taken to undertake a significant rewrite so that the
completed standards were both revised (to reflect international best practice) and redrafted.
In Australia some of the ambiguity issues identified in the early stages of the IAASB project were able to be incorporated as part of our “legally
enforceable” changes. However, the balance of the changes had to be deferred until completion of the revision of the entire suite of standards at the
international level.
The AUASB announced its intention to commence a “Clarity” project in October 2007 and to date 3 batches of ED’s covering 18 standards have been issued. A
further 4 batches are planned over the next six months. The Exposure period is generally 30 days and the AUASB currently expects to have all the standards
reissued in “Clarity” format in the second half of 2009 with an application date for financial reporting periods commencing on or after 1 January 2010.
The AUASB has release a timetable for the project on its website as well as a summary of the drafting conventions to be applied. For more details visit the
AUASB 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.
1 December 2008
AASB ED 169 Improving Disclosures about Financial Instruments: Proposed Amendments to AASB 7
5 December 2008
AASB ED 167 Discontinued Operations: Proposed Amendments to AASB 5
AASB ED 168 Additional Exemptions for First-time Adopters: Proposed amendments to AASB 1
IASB Simplifying Earnings Per Share: Proposed Amendments to IAS 33
15 December 2008
IASB ED Improving Disclosures about Financial Instruments (proposed amendments to IFRS 7
IAASB Matters to Consider in a Revision of International Standard on Review Engagements (ISRE) 2400 Engagements to Review Financial Statements
AUASB EDs
ASA 200 Overall Objective of the Independent Auditor and the Conduct of an Audit in Accordance with Australian Auditing Standards
ASA 250 Consideration of Laws and Regulations in an Audit of a Financial Report
ASA 320 Materiality in Planning and Performing an Audit
ASA 450 Evaluation of Misstatements Identified During the Audit
ASA 510 Initial Audit Engagements – Opening Balances
ASA 550 Related Parties
ASA 580 Written Representations
ASA 720 The Auditor’s Responsibility in Relation to Other Information in Documents Containing An Audited Financial Report
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.
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.
*New Event* Economic downturn: the impact on business
Sydney, 2 December & Melbourne, 10 December
This full day course looks at how to advise your business and/or clients in these troubled times and how to minimise risk on investment decisions in the
current investment market.
*New Event* Auditing: the impact of the credit crunch
Melbourne, 3 December & Sydney, 8 December
This half day course is designed to highlight some of the particular accounting and auditing procedures that will be directly impacted by the current
economic conditions.
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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