|
Welcome to the forty-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. Joint submission on External Audit Consultation Paper
CPA Australia Limited, the Institute of Chartered Accountants in Australia and the National Institute of Accountants (the joint accounting bodies) have jointly lodged a submission on the External Audit Consultation Paper released in October 2008 to the Department of Climate Change.
The submission can be downloaded on the Institute website.
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, Group Reporting at IAG. This session will discuss the recent changes to the financial instruments standards as a result of 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 look at Financial Instruments: Where are we up to?
Covering:
-
the latest developments in accounting for financial assets (the AASB 2008-10 changes)
- the debated issue about whether Fair Value is pro-cyclical and so 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, members can register online by Wednesday 3 December 2008.
If you have any questions regarding the forum, please email crdg@charteredaccountants.com.au.
3. Draft Institute submissions for your comment
The Institute is looking for comment/feedback on two draft submissions that are due to be lodged with the Australian Accounting Standards Board (AASB) early December:
Our comments on:
-
AASB ED 169 Improving Disclosures about Financial Instruments: Proposed Amendments to AASB 7 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
- AASB ED 167 Discontinued Operations: Proposed Amendments to AASB 5 and IASB ED Discontinued Operations – Proposed Amendments to IFRS 5 support the proposals
The closing date for the submissions is 1 December 2008 and 5 December 2008 respectively. We would appreciate any feedback to techsubmissions@charteredaccountants.com.au
by Friday, 28 November 2008.
4. Standards & Public Affairs: Lee White to succeed Bill Palmer as general manager
Lee White, FCA, will take on the role of General Manager – Standards and Public Affairs for the Institute, effective 2 March 2009.
Lee will succeed Bill Palmer, FCA, who has played a significant role in ensuring the Institute meets its strategic goals, in particular, positioning the Institute as a thought leader and keeping focus on relevance to our membership and stakeholders, over the last five years.
Lee is currently Chief Accountant for the Australian Securities and Investments Commission, with responsibility for strategy, compliance and leadership of accounting, financial reporting and auditing practices. Prior to ASIC, Mr White held the position of Assistant Auditor-General in NSW.
Bill will move to a strategic role growing the Institute’s activities in Asia, on a part-time basis.
View the full article and media release.
5. Omnibus 2008-11: AASB 3 and not for profits
The AASB has approved for issue AASB 2008-11 Amendments to Australian Accounting Standard – Business Combinations Among Not-for-Profit Entities [AASB 3] which applies to annual reporting periods beginning on or after 1 July 2009 with early adoption permitted for annual reporting periods beginning on or after 30 June 2007 but before 1 July 2009. AASB 2008-11 will be posted on the AASB website shortly.
AASB 2008-11 confirms that the revised AASB 3 Business Combinations, which is applicable from 1 July 2009, must be applied by not-for-profit entities, other than where there is common control. However, it requires restructures of local governments to be accounted for in a manner consistent with the superseded AAS 27 Financial Reporting by Local Governments. The requirements relating to restructures of local governments will be reviewed in due course in the light of the outcome of the Board’s project on control in the public sector.
6. IASC Trustees' meeting summary – 9-10 October 2008
The Trustees of the International Accounting Standards Committee (IASC) Foundation held their last meeting in Beijing, China on 9-10 October 2008. The two key issues discussed were:
IASB’s response to the global financial crisis: the trustees issued a media release outlining the Trustees’ unanimous support for the IASB’s approach in accelerating its response to the credit crisis, which involves eliminating any differences in how International Financial Reporting Standards (IFRSs) and US generally accepted accounting principles (GAAP) address the issue of reclassification of financial instruments.
Status of the Constitution Review: the trustees decided to review the proposals further after receiving a large number of responses to their proposals in part 1 of the review of Constitution, which deals with the creation of a Monitoring Group as a means to enhance the organisation’s public accountability and expanding the IASB and introducing guidelines on its geographical composition. Part 2 of the review will begin in November 2008, with comment period of 120 days.
For more details, go to the IASB website.
7. SEC invites comment on IFRS ‘roadmap’ for USA
The Securities Exchanges Commission (SEC) has published for comment its proposed Roadmap for the potential use of financial statements prepared in accordance with International Financial Reporting Standards (IFRS) by US Issuers.
The Roadmap sets forth several milestones that, if achieved, could lead to the required use of IFRS by US issuers in 2014. The milestones include:
- Improvements in accounting standards based on the latest IASB-FASB Memorandum of Understanding (the Commission cites revenue recognition and financial statement presentation as two projects that, when completed should 'improve financial reporting significantly')
- Accountability and funding of the IASC Foundation
- Improvement in the ability to use interactive data for IFRS reporting
As part of the Roadmap, the Commission is proposing to permit early use of IFRS by a limited number of US issuers where this would enhance the comparability of financial information to investors. Only an issuer whose industry uses IFRS as the basis of financial reporting more than any other set of standards would be eligible to elect to use IFRS, beginning with filings in 2010.
Comments are due to SEC 19 February 2009 following publication in the Federal Register. To download the proposed rule, go to the SEC website. We would appreciate any feedback to techsubmissions@charteredaccountants.com.au by Friday, 30 January 2009.
8. G20 outcomes as they relate to standard setting
The outcomes of a meeting of the G20 Heads of State and leaders of the World Bank, the International Monetary Fund, the United Nations, and the Financial Stability Forum were published by the Whitehouse. The Declaration sets out both immediate actions (by 31 March 2009) and medium-term actions that should be taken to strengthen the global economy and reform the world's financial markets. In relation to IASB and IFRS the following excerpts are provided:
1. Strengthening Transparency and Accountability
Immediate Actions by March 31, 2009:
- The key global accounting standards bodies should work to enhance guidance for valuation of securities, also taking into account the valuation of complex, illiquid products, especially during times of stress.
- Accounting standard setters should significantly advance their work to address weaknesses in accounting and disclosure standards for off-balance sheet vehicles.
- Regulators and accounting standard setters should enhance the required disclosure of complex financial instruments by firms to market participants.
- With a view toward promoting financial stability, the governance of the international accounting standard setting body should be further enhanced, including by undertaking a review of its membership, in particular in order to ensure transparency, accountability, and an appropriate relationship between this independent body and the relevant authorities.
- Private sector bodies that have already developed best practices for private pools of capital and/or hedge funds should bring forward proposals for a set of unified best practices. Finance Ministers should assess the adequacy of these proposals, drawing upon the analysis of regulators, the expanded FSF, and other relevant bodies.
Medium-term actions:
- The key global accounting standards bodies should work intensively toward the objective of creating a single high-quality global standard.
- Regulators, supervisors, and accounting standard setters, as appropriate, should work with each other and the private sector on an ongoing basis to ensure consistent application and enforcement of high-quality accounting standards.
- Financial institutions should provide enhanced risk disclosures in their reporting and disclose all losses on an ongoing basis, consistent with international best practice, as appropriate. Regulators should work to ensure that a financial institution's financial statements include a complete, accurate, and timely picture of the firm's activities (including off-balance sheet activities) and are reported on a consistent and regular basis.
2. Reinforcing International Cooperation
Medium-term actions:
- Authorities, drawing especially on the work of regulators, should collect information on areas where convergence in regulatory practices such as accounting standards, auditing, and deposit insurance is making progress, is in need of accelerated progress, or where there may be potential for progress.
9. AASB signs National Standard Setters Group communiqué to the IASB
The AASB has released a National Standard Setters Group communiqué to the International Accounting Standards Board (IASB).
The communiqué supports the IASB and its efforts to achieve true global financial reporting standards. While acknowledging that the IASB has been put under considerable pressure by the current credit crisis being felt around the world, the National Standard Setters Group encourages the IASB to continue to follow appropriate due process in its deliberations.
To download the communiqué, go to the AASB website.
10. AASB Action Alert – November
The AASB Action Alert from the 12-13 November 2008 Board meeting is now available on the AASB website.
Please refer to ANT44/2008 for highlights of the meeting. More detail can be obtained in the action alert.
Further, the action alert welcomed the appointment of Bruce Porter as part-time acting chairperson of the AASB pending the appointment of a full time chairman to the board.
11. Superannuation Clearing House and the Lost Members Framework
The Minister for Superannuation and Corporate Law has released a two-part discussion paper on the implementation of the Government’s superannuation clearing house measure and possible initiatives to reduce the number of lost super accounts.
The discussion paper invites feedback on:
- the issues associated with the implementation of the Government’s 2008-09 Budget measure to establish an optional superannuation clearing house facility; and
- possible initiatives aimed at improving the lost members framework
Comments are due on 19 December 2008. For more information, visit the Treasury website and the Minister for Superannuation and Corporate Law ministerial website.
Segment reporting and impairment
Q: I have heard that even if I have early adopted AASB 8 Operating Segments to avoid making segment disclosures, the content of that standard may still have an impact on my financial report. How can this be?
A: The revised segment reporting standard AASB 8 impacts the level at which impairment tests must be carried out in accordance with AASB 136 Impairment of Assets, regardless of whether the entity has to apply AASB 8.
When AASB 8 was issued, a consequential amendment to AASB 136 clarified that each cash generating unit or group of cash generating units to which goodwill is allocated should not be larger than an operating segment determined in accordance with AASB 8. These cash generating units also form the basis for impairment testing for the goodwill. This applies whether or not an entity is required to disclose segment information in accordance with AASB 8.
Although AASB 8 is not applicable until 1 January 2009, many entities have adopted AASB 8 early – frequently to avoid having to make the segment disclosures. These entities are also required to adopt the AASB 136 amendment early.
The next question that arises is whether the level of the impairment test should be the operating segment level or reportable segment level (being an amalgamation of segments permitted for disclosure purposes by AASB 8).
As part of the IASB’s annual improvements project, ED 165 proposes clarifying AASB 136 so that the largest unit permitted for the goodwill impairment test required by AASB 136 is the lowest level of operating segment defined by AASB 8 before any aggregation that is permitted by the standard.
The impact of these changes is that all entities will need to reconsider how their existing operating segments and cash generating units align in order to effectively assess the impact of the adoption of AASB 8.
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.
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 he 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.
| 
The Institute’s education and training pathway is the preferred choice for industry professionals.
Considering a career as a Chartered Accountant? Looking for the next step in your professional life?
The Institute is leading the debate in the areas that matter most to business and the accounting profession. 
The Institute produces an invaluable suite of tools, guidance, products and services to help members in their work. 
Print this article
Email this Article
Back to Top
