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April 28, 2009

News Briefs

IFAC president warns against auditor rotation…

Forum tackles going concern…

US IFRS convergence to take 10-15 years: Herz…

AUDITOR ROTATIONIFAC president warns against auditor rotation

Mandatory auditor rotation makes no sense, according to International Federation of Accountants president Robert Bunting.

“While firm rotation might seem to remove any bias that may be attached to past decisions, it makes no sense at all,” Bunting said. “In most parts of the world there are not enough choices to allow for this without forcing companies to choose audit firms that have no expertise in their industry.”

Bunting said a number of countries have experimented with mandatory rotation before abandoning it as almost impossible to implement. Yet, it is still being considered as a remedy to the Satyam scandal in India.

GOING CONCERNForum tackles going concern

Going concern and related audit considerations dominated a recent Forum of Firms symposium in London.

The symposium featured panel discussions on topics including clients’ access to funding and financial statement and audit report implications related to going concern. Audit considerations such as valuation and impairment, materiality, and internal controls were also debated.

The symposium was attended by more than 70 partners and senior executives from 24 international accounting networks.

CONVERGENCEUS IFRS convergence to take 10-15 years: Herz

Financial Accounting Standards Board chairman Robert Herz has said US GAAP convergence with IFRS could take 10 to 15 years, according to media reports.

Speaking at this month’s Financial Crisis Advisory Group (FCAG) meeting in London, Herz made the comment when asked about a time frame by FCAG co-chair and former commissioner of the US Securities and Exchange Commission Harvey Goldschmid.

Attendees are said to have been surprised by Herz’s comment as it falls well outside the time frame issued under the Norwalk Agreement, a memorandum of understanding between the FASB and International Accounting Standards Board (IASB), which calls for the completion of all major joint projects by 2011. IASB chairman David Tweedie noted it took 12 years to develop IAS 39, the standard covering financial instruments, so developing a single, simpler set of standards could not be rushed.

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