• The Hong Kong Institute of Certified Public Accountants (HKICPA) will continue to liaise with Hong Kong’s Financial Reporting Council (FRC) and Ernst & Young (E&Y) during investigations into the Big Four firm’s auditing of Akai Holdings.
Last month, Hong Kong police searched E&Y’s local offices and seized original working papers in connection with the suspected forgery of Akai’s audit documents.
The Big Four firm was in court last month facing allegations it was negligent in its audits of Akai from 1997 to 1999.
E&Y settled with the liquidator of the Chinese consumer electronics company for an undisclosed amount and suspended one of its partners after finding some of the documents in the audits of Akai could “no longer be relied on”.
The HKICPA said once sufficient evidence emerged from the FRC and police investigations to show that institute members may have been involved in the falsification of documents, it would initiate its disciplinary process.
• The Korean Institute of Certified Public Accountants will train accounting staff at central government agencies and public organisations as part of an agreement with the Ministry of Strategy and Finance.
The agreement was signed after Korea adopted accrual accounting and double-entry bookkeeping for governmental accounting on 1 January 2009.
The institute said more than 1,000 people have signed up for the training but due to budget constraints, only 740 will be able to participate.
They include accounting personnel from 48 major government agencies.
• New Zealand has become one of the first countries to apply the full set of clarified International Standards on Auditing (ISAs), according to the local professional accountancy body. For audits of financial statements covering periods beginning on or after 1 October 2009, auditors complying with New Zealand auditing standards will also be able to assert compliance with ISAs.
New Zealand Institute of Chartered Accountants general manager for standards and advocacy Bruce Bennett said this change will complete a process of strengthening auditing and financial reporting in New Zealand that began in 2005.
“Over the past four years, we have been progressively adopting the international standards and educating our members on these new standards,” he said.
NORTH AMERICA, LATIN AMERICA • American Institute of Certified Public Accountants (AICPA) president and chief executive Barry Melancon has told the US President’s Economic Recovery Advisory Board that a comprehensive tax reform is needed.
“The dynamic American economy is rebounding slowly and, we believe, is burdened by an unnecessarily cumbersome and somewhat outdated income tax system,” Melancon said.
“In particular, we see significant problems for small businesses arising from the increasing complexity of the tax law.”
The AICPA said the US Congress is likely to take up tax reform as a major legislative challenge beginning in January.
• The US Federal Accounting Standards Advisory Board (FASAB) has issued a new standard for estimating the historical cost of general property, plant and equipment.
Statement of Federal Financial Accounting Standards (SFFAS) 35 amends SFFAS 6 and 23 and clarifies that reasonable estimates of original transaction data historical cost may be used to value general property, plant and equipment.
The FASAB is responsible for setting accounting standards for the US Federal Government.
• The national average salary for US finance and accounting positions is expected to decline less than 1 percent next year, according to a survey from recruiters Ajilon.
Chief financial officers and treasurers are among the positions that will witness a sharp wage decrease, with the national average salary expected to drop almost 8 percent next year, compared with 2009.
The survey was compiled by combining national salary data from hundreds of Ajilon’s staff recruiting for finance and accounting positions at companies in 75 major markets across North America.
• The US Public Company Accounting Oversight Board (PCAOB) has changed the effective date of new rules that require reporting by registered public accounting firms and provide for succeeding to the registration status of a predecessor firm.
The postponement will allow the PCAOB to resolve technical issues related to deploying its new online system for processing and publishing filings on the new forms.
It will not affect the timing of the first annual reports required from registered firms, which will still be due on 30 June 2010 for the 12 months ending 31 March 2010.
• Almost three-quarters of US executives want the US Securities and Exchange Commission (SEC) to approve its proposed IFRS road map or a modified version of it, according to a survey by Deloitte US.
The study found 51 percent of respondents thought the SEC should approve the proposed road map but consider pushing back the mandatory deadline by a year, and 19 percent believe the SEC should approve its proposed road map “as is”.
Opinions were split on the approach to convergence.
Thirty-nine percent of respondents wanted the International Accounting Standards Board and Financial Accounting Standards Board to achieve as much convergence as possible between now and 2011, and then focus on IFRS conversion.
The same number wanted the two groups to extend the convergence plan over the next 5 to 10 years.
• More than 47 percent of Canadians who hold the chartered financial analyst designation are not very confident that they have a full understanding of what the impact of IFRS will be on the companies they invest or follow, according to a survey by PricewaterhouseCoopers Canada. Twenty percent were not at all confident.
Canada is due to complete its transition to IFRS by January 2011.
• Supervision of the financial sector in Europe is set to be revamped through the formation of a series of new regulatory organisations. The EC has adopted draft legislation that aims to reinforce financial stability throughout the EU, identify systematic risks at an early stage and foster cohesion and co-operation in emergency situations.
The legislation will create a new European Systemic Risk Board (ESRB) to detect risks to the financial system as a whole.
It would also set up a European System of Financial Supervisors, composed of national supervisors and new authorities to oversee the banking, securities, insurance and occupational pensions sectors.
Three new European supervisory authorities will be created by transforming existing committees. The Committee of European Banking Supervisors will become the European Banking Authority, the Committee of European Insurance and Occupational Pensions Committee will become the European Insurance and Occupational Pensions Authority and the Committee of European Securities Regulators will become the European Securities and Markets Authority.
In addition to assuming the existing functions of the committees, the new authorities will be responsible for developing proposals for technical standards; resolving cases of disagreement between national supervisors, where legislation requires them to co-operate or agree; and contributing to ensuring consistent application of technical community rules.
• The UK Audit Practice Board (APB) has issued updated guidance on the auditing of complex financial instruments. The updated practice note (PN) 23 modernises an earlier version created in 2002.
It is aimed at assisting auditors address current considerations that are relevant in the audit of financial statements of entities that use complex financial instruments.
The guidance widens the scope of PN 23 to cover other complex financial instruments, as well as derivatives, as many of the audit considerations are the same, the APB said.
• A recent survey of UK accountants found 86 percent regularly work past normal working hours and 52 percent do so every day.
The study, by online accounting provider e-conomic, also found 38 percent of respondents regularly work past 10pm, and 22 percent of those that have children said it is quite normal for them to not get home in time to see their children before bedtime.
The most popular response when asked what single thing would most improve their work life balance was ‘less work for a higher margin’ and 28 percent thought they were over-worked and under-paid.
The e-conomic survey was conducted this month among 2,000 accountants.
• Des Hudson has been appointed chairman of the Taxation Disciplinary Board by the Chartered Institute of Taxation (CIOT) and the Association of Taxation Technicians. Hudson is currently chief executive of the Law Society of England and Wales and was previously chief executive of the Institute of Chartered Accountants of Scotland. His four-year term begins on 1 November 2009.
• There is no case for any significant changes in the UK’s governance rules in the wake of the financial crisis, according to a recent study by the Institute of Chartered Accountants of England and Wales (ICAEW) Foundation.
The report, Getting it Right, found that over the past few years more effort has been made to strengthen risk identification processes and ensure board committees spend more time overseeing risk management.
Most of the non-financial company boards are satisfied that their risk management is working well thus there is no need for new governance structures and processes.
• The Institute of Chartered Accountants in England and Wales has launched a register that is intended to give courts greater confidence in the evidence presented by members of the accounting profession. The forensic accountant and expert witness accreditation scheme was developed in response to pressure from the UK Government for improved credibility of evidence presented to the legal system.
• The UK Financial Reporting Council (FRC) has updated guidance to assist directors of UK companies when making assessments of going concern. The guidance is based on three principles: the process directors should follow when assessing going concern; the period covered by the assessment; and the disclosures on going concern and liquidity risk.
The guidance takes into account feedback from market participants on a series of documents published by the FRC in the past 12 months.
AFRICA, MIDDLE EAST, SOUTH ASIA • Claims the Indian government has tightened its control over the Institute of Chartered Accountants in India (ICAI) and diluted the power of the institute’s president have been refuted by the institute.
Earlier this month, Indian media reports suggested one rule change, approved by the ICAI’s financial committee, would require all financial issues at the ICAI to be cleared consensually by members of the committee. The committee is made up of three government nominees, the president and the vice-president.
Previously, the ICAI president had the authority to approve spending. The ICAI said there has been no change in the composition of the finance committee since last year. The rumours of efforts to curb the ICAI presidential powers follow criticism from ICAI past president Sunil Talati about reckless spending by current ICAI president Uttam Agarwal. Last month, Talati called for a rethink of the extensive powers granted to ICAI presidents when they take office.
• The Institute of Chartered Accountants in England and Wales (ICAEW) and the Institute of Chartered Accountants of Bangladesh (ICAB) have signed a memorandum of understanding (MoU) to work together to develop the accounting and auditing professions in Bangladesh. The two institutes will continue their work to develop a new ICAB qualification, look at examination requirements allowing members of one body to access membership of the other, co-operate on developing membership support and liaise on technical matters. The agreement between the two bodies was signed on 26 October by ICAEW president Martin Hagen and ICAB president Nasir Ahmed.