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April 14, 2008

Region round-up

• CPA Australia’s Singapore division has appointed a new president…

Russell Bedford International has admitted Cameron & Prentice Chartered Accountants as its first member firm in Cape Town, South Africa…

• The European Commission  has approved four proposals to cut unnecessary administrative burdens in EU Company Law…

Ernst & Young Canada (E&Y) has recommended the Canadian Securities Administrators allow Canadian companies to adopt IFRS before the 2011 changeover date…

Asia-Pacific Asia Pacific• The Committee of European Securities Regulators has recommended the European Commission (EC) recognise the equivalence of US GAAP and Japanese GAAP to IFRS for use on EU markets but suggested postponing recognition of Chinese GAAP. The recommendation was issued following a mandate from the EC in December 2007 requesting technical advice on the equivalence of Chinese, Japanese and US GAAP.

• The Institute of Chartered Accountants in England and Wales will begin offering its qualification in Singapore later this year. Europe’s largest professional body signed a memorandum of understanding with the Institute of Certified Public Accountants of Singapore (ICPAS), which enables Singaporean students to study the Associate Chartered Accountant (ACA) qualification from September. ICPAS president Tan Boen Eng commented: “As part of ICPAS strategy to enhance the talent pool in Singapore, ICPAS is pleased to be able to offer this pathway to the accountancy profession.”

CPA Australia’s Singapore division has appointed a new president. Chaly Mah joins the institute after a 30-year career within the accounting industry, including being chief executive of Deloitte Southeast Asia and Deloitte Singapore. He is currently regional managing partner and chief executive of Deloitte Asia Pacific.

• The convergence project to eliminate the major differences between IFRS and Japanese GAAP is on track to be completed by the end of this year, according to standard setters. Representatives from the International Accounting Standards Board and the Accounting Standards Board of Japan recently met to discuss progress of the convergence project, also known as the Tokyo Agreement. Issues discussed included consolidation, revenue recognition, insurance contracts – interaction with other projects, liability and equity, and financial statement presentation.

CPA Australia has commented on the International Financial Reporting Interpretations Committee’s draft interpretation D23 Distributions of Non-Cash Assets to Owners, stating it would prefer the International Accounting Standards Board to issue a new standard on the topic. While CPA Australia agreed the interpretation would reduce the diversity in the accounting practice, it suggested distributions to owners or dividends warrants a specific standard.

• The Accounting and Corporate Regulatory Authority in Singapore (ACRA) has signed an agreement with the US audit watchdog to co-operate in the oversight of audit firms in both jurisdictions. The Public Company Accounting Oversight Board (PCAOB) has recently been strengthening ties with several overseas regulators. PCAOB director of international affairs Rhonda Schnare commented: “We are pleased to reach this milestone with ACRA, an important partner in the region and in the global capital markets. In light of the number of non-US firms registered with the PCAOB, co-operative relationships like this one are critical to the PCAOB’s success.”

Africa, Middle East, South Asia Africa, Middle East, South East AsiaRussell Bedford International has admitted Cameron & Prentice Chartered Accountants as its first member firm in Cape Town, South Africa. Cameron & Prentice has 50 staff, led by partners Peter Prentice, Antonie van der Hoek, Chris Norris and David Warneke. The Cape Town practice has experience in auditing and due diligence, corporate and personal tax, management consulting, accounting, payroll processing, company secretarial services, wills and trusts. Norris said: “We view our link into the Russell Bedford network as a vital part of our expansion programme.”

• The Dubai Financial Services Authority and the Securities and Futures Commission of Hong Kong have announced a joint regulatory initiative to enhance access to Islamic financial products in Hong Kong and the Dubai International Financial Centre. The agreement outlines a commitment towards promoting and developing respective Islamic capital market segments, in particular on facilitating the distribution of Islamic funds in both business centres.

• The Arab Society of Certified Accountants (ASCA) has released a new edition of the ASCA curriculum, which has been validated by Cambridge University’s International Examinations. The new curriculum aims to prepare Arab accountants for advances in the accountancy profession.

• The Institute of Chartered Accountants of Pakistan has collaborated on a new corporate governance guide for family-owned companies, which is intended for progressive, medium- to large-sized, non-listed, family-owned companies. The guide establishes principles and practices to help directors improve governance. The underlying objective of the guide is to support sustainable growth and long-term value creation in family-owned companies.

• The Institute of Chartered Accountants of India (ICAI) has clarified best practice treatment for foreign currency derivatives. Although the professional body recently issued AS 30, Financial Instruments: Recognition and Measurement, which contains accounting for derivatives, it can only be applied voluntarily in a year’s time and is mandatory from April 2011. One of the key clarifications issued by the ICAI is that entities are required to provide for losses in respect of all outstanding derivative contracts at the balance sheet date by marking them to market.

• The Chartered Institute of Management Accountants has signed an agreement with the Indian Institute of Management Calcutta to establish a centre for the study of management accountancy. The centre will be based at the Chartered Indian Institute of Management Calcutta campus and will conduct research on changing and improving management accountancy practices in India and  neighbouring countries.

Kreston International has admitted a new Indian member firm Frank & Co. Based in Nagercoil, Tamil Nadu, the firm offers accounting and audit, tax and management consulting services. The association has eight member firms in the country.

Europe Europe• The UK Accounting Standards Board has issued an updated version of the Financial Reporting Standard for Smaller Entities to reflect changes in company law arising from the Companies Act 2006. The updated standard includes a 20 percent increase in the thresholds for qualifying as a smaller company; a requirement to report separately political and charitable donations; and an increase in the threshold for reporting these donations to £2,000 ($4,000).

• The European Financial Reporting Advisory Group has recommended the EC adopt the revised International Accounting Standard (IAS) 1 Presentation of Financial Statements and the International Financial Reporting Interpretations Committee’s interpretation 14, which relates to IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction.

• KPMG UK senior partner and chair John Griffith-Jones and BDO Stoy Hayward managing partner Jeremy Newman are among 12 members of a working group tasked with developing a code of best practice for the governance of UK audit firms. The Audit Firm Governance Working Group was formed following a recommendation in the recent Market Participants Group report, which tackled concentration issues in the audit marketplace. The Institute of Chartered Accountants in England and Wales and the Financial Reporting Council established the group.

• Ian Powell has been elected as the next chairman and senior partner of PricewaterhouseCoopers UK. Powell, the firm’s head of advisory, will serve a four-year term from July.

• The European Commission  has approved four proposals to cut unnecessary administrative burdens in EU Company Law. The revised changes include: parent companies with no material subsidiaries no longer need to prepare consolidated accounts; and medium-sized companies can be exempted from providing detailed data in annual accounts. It is estimated that these measures could result in up to €600 million ($935.6 million) in savings, especially for SMEs.

• The Institute of Chartered Accountants in Ireland (ICAI) has grown its membership by 6 percent in the past year, according to its 2007 Annual Report. Ireland’s largest professional body reported 16,691 members and 1,714 students, which is a 10 percent increase on last year’s student intake.

• The Auditing Practices Board issued four new advisory bulletins, three of which provide guidance on aspects of the UK Companies Act 2006 that affect auditors. The majority of the accounting and auditing requirements of the Act came into force for periods commencing on or after 6 April 2008.

• A new modular exam structure for the Chartered Tax Adviser qualification has been set by the UK Chartered Institute of Taxation. The institute said the new structure recognises the increasing degree of specialisation within the tax profession while retaining the major benefits of the current system. It is due to apply to students sitting examinations in May 2009.

North America, Latin America AmericasErnst & Young Canada (E&Y) has recommended the Canadian Securities Administrators allow Canadian companies to adopt IFRS before the 2011 changeover date. This recommendation was one of several the firm made in response to a concept paper proposing changes to securities rules on acceptable accounting principles for financial reporting. E&Y chief executive and chair Lou Pagnutti said the market should dictate which companies should adopt IFRS early.

• The US House of Representatives has passed two provisions that could have a positive impact on the accounting profession. One provision would restore the proper relationship between tax preparers and taxpayers by equalising Internal Revenue Service disclosure standards. The other provision would free businesses from recordkeeping requirements for mobile phones.

• The US Public Company Accounting Oversight Board (PCAOB) has voted to adopt Rule 3526 Communication with Audit Committees Concerning Independence and an amendment to Rule 3523 Tax Services for Persons in Financial Reporting Oversight Roles. The adoption of Rule 3526 seeks to enhance communication between audit committees and registered firms regarding the firm’s independence. It will require a registered public accounting firm to describe in writing all relationships between the firm and any of its affiliates to the audit committee.

• Canada’s sixth largest professional services firm has revealed plans to become carbon neutral within five years. BDO Dunwoody has begun calculating its carbon footprint across its 95 offices. Keith Farlinger, the firm’s CEO-elect, said BDO intends to become a market leader on environmental issues and is the first national firm in Canada to commit to carbon neutrality.

KPMG US has established the KPMG International Financial Reporting Standards Institute to raise awareness and address the information needs of US companies, investors, academics and others who may be affected by a transition to IFRS. The institute will hold its inaugural IFRS web cast in May 2008. It will be hosted by KPMG partner Janice Patrisso, who is the director of the institute.

• Canadian financial executives do not believe their staff are prepared for the conversion to IFRS scheduled for 2011. A report, developed by the research organisation of Financial Executives International Canada and Ernst & Young Canada, suggested that the manufacturing, retail and distribution industries were the least prepared on the impacts of IFRS. The utilities sector claimed to be most prepared with 90 percent already assessing the impact of IFRS conversion.

• The American Institute of Certified Public Accountants and US National Association of State Boards of Accountancy have renewed a trilateral mutual recognition agreement with professional accounting bodies in Canada and Mexico. The five-year agreement with the Canadian Institute of Chartered Accountants and Mexico’s Contadores Publicos Certificados was signed on 17 April.

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