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July 14, 2008

News Briefs

Mills chosen to lead UK oversight board… IASC releases revised constitution review proposals… European standard setters call for financial reporting review…  Global auditing board outlines three-year strategyIASB launches credit crisis webpageIFRIC releases interpretations on real estate and hedge accounting… Singaporean accountants rise rapidly, research finds… IFAC division issues proposals to clarify code of ethics… Audit standard setter issues revised standards… Deloitte UK hits £2 billion mark…


PEOPLE Mills chosen to lead UK oversight board

A barrister and adjudicator for Her Majesty’s Revenue and Customs (HMRC) has been appointed as the next chair of the UK Professional Oversight Board. Barbara Mills will replace John Bourn, who served more than two terms as chair of the board and its predecessor. Mills, who takes on her new role on 1 October, has been adjudicator for HMRC since 1999 and is also a member of the UK Competition Commission. Her career as a barrister included work on financial fraud cases. Mills’ career highlights include being appointed as a Queen’s Counsel in 1986 and director of public prosecutions from 1992 to 1997.

REGULATION IASC releases revised constitution review proposals

The trustees of the International Accounting Standards Committee Foundation have released revised proposals for the creation of a monitoring group and changes to the size and composition of the International Accounting Standards Board (IASB). One change from the initial proposal is the trustees are now recommending the IASB normally be comprised of four members from Asia/Oceania region, four members from Europe, four members from North America, one member from Africa, one member from South America and two members from any area subject to maintaining overall geographic balance. The previous proposal did not mandate representation from Africa and South America, instead suggesting there should be four members from any area. Comments on the proposal are due by 20 September.

REGULATION European standard setters call for financial reporting review

Financial reporting did not cause the current crisis in global financial markets, according to a group of European standard setters. However, the European Financial Reporting Advisory Group and UK, French and German standard setters do believe existing financial reporting requirements should be reviewed. Four possible areas of weakness worth exploring were identified, including disclosures that should be provided to support the measure used, and derecognition and the disclosures provided about off-balance sheet items. Measuring financial instruments at fair value, particularly in illiquid markets, was another area singled out for review.

STRATEGY Global auditing board outlines three-year strategy

The International Auditing and Assurance Standards Board (IAASB) has released its strategy and work programme for 2009 to 2011. The three-year plan includes emphasis on the development of standards that contribute to the effective operation of the world's capital markets and that address the needs of small- and medium-sized entities and small- and medium-sized practices. IAASB chair John Kellas commented: “The IAASB's vision is that the high-quality standards on assurance, related services and, in particular, International Standards on Auditing that we develop in the public interest are adopted and applied internationally.”

STRATEGY IASB launches credit crisis webpage

The International Accounting Standards Board (IASB) has created a dedicated section on its website to outline the initiatives it has underway that are related to the credit crisis. The webpage lists the responses the IASB has made in relation to the April 2008 report from the Financial Stability Forum (FSF), which suggested a series of recommendations for enhancing market and institutional resilience in the wake of recent market turbulence. According to the IASB, three of those recommendations relate to enhancements to financial reporting and that forms the core of the IASB’s response to the credit crisis. The IASB has also responded to FSF recommendations on accounting for off balance sheet vehicles and strengthening standards to achieve better disclosures about valuations and methodologies.

STANDARDS IFRIC releases interpretations on real estate and hedge accounting

The International Financial Reporting Interpretations Committee (IFRIC) has released two new interpretations. IFRIC 15 Agreements for the Construction of Real Estate provides guidance on how to determine whether an agreement for the construction of real estate is within the scope of International Accounting Standard (IAS) 11 Construction Contracts or IAS 18 Revenue. It is effective for annual periods beginning on or after 1 January 2009 and is to be applied retrospectively. IFRIC 16 Hedges of a Net Investment in a Foreign Operation was created after constituents asked for guidance on accounting for the hedge of a net investment in a foreign operation in an entity’s consolidated financial statements. It is effective for annual periods beginning on or after 1 October 2008. RESEARCH Singaporean accountants rise rapidly, research finds

New professionals can quickly rise through the ranks within the first few years of their career, according to research by the Institute of Certified Public Accountants of Singapore. On average, accountants surveyed for the study had been in the profession for six years but the level of experience and age gaps between the more junior and senior staff was not significant. The study revealed 21 percent of accountants had risen into managerial positions within five years of joining the profession.

STANDARDS IFAC division issues proposals to clarify code of ethics

The International Ethics Standards Board for Accountants, an independent standard-setting board within the International Federation of Accountants (IFAC), has proposed some changes to the IFAC Code of Ethics for Professional Accountants. The proposals aim to significantly enhance the clarity and understanding of the provisions in the code, while refining the application of its strategic framework. Comments are requested by 15 October.

STANDARDS Audit standard setter issues revised standards

The International Auditing and Assurance Standards Board has released a revised ISA and three clarity redrafted ISAs. ISA 550 Related Parties was revised due to the involvement of related parties in major corporate scandals. The three clarity redrafted standards are: ISA 250 Consideration of Laws and Regulations in an Audit of Financial Statements; ISA 510 Initial Audit Engagements-Opening Balances; and ISA 570 Going Concern. The standard setter said it is on track to finalise its clarity project by the end of this year.

FINANCIAL RESULTS Deloitte UK hits £2 billion mark

The UK’s second-highest fee-earning firm has reported revenues for its 2007/2008 financial year climbed to £2 billion ($4 billion) following growth of 11.5 percent. Deloitte UK’s strong growth followed a 16 percent increase in fee income last year and 15 percent in 2006. The results push Deloitte closer to UK market leader PricewaterhouseCoopers’ 2007 fee income of £2.1 billion. Deloitte, whose financial year ends on 31 May, is the first UK Big Four firm to report its interim results.

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