•The Australian Financial Reporting Councilwill develop a paper that will discuss different options for establishing an accounting standard in the Australian context of an emissions trading scheme. This decision was one of several made when the council met in Canberra recently.
Other major outcomes of the meeting included: the proposal to form an Australian expert panel to give advice in relation to the credit crunch and valuations; and a statement from the chairman of the Australian Audit and Assurance Standards Board that Australia should proceed on the assumption that the adoption date for the International Auditing and Assurance Standards Board clarity standards will be 1 January 2010.
• The Australian Auditing and Assurance Standards Board has released its first assurance standard on compliance engagements. Assurance Standard (ASAE) 3100 Compliance Engagements will assist with the audit or review of an entity’s compliance with requirements under legislation, regulation, company policies, statutory requirements and enforceable contractual obligations.
The board previously provided subject matter-specific guidance to auditors on areas of compliance. Practitioners will need to use this standard for reporting periods or engagements commencing on or after 1 October 2008. Early adoption is permitted.
• The Accounting Standards Board of Japan has released a draft accounting standard on disclosures about fair value of investment and rental property and its implementation, as well as a further six draft standards on business combinations and related matters. The drafts are available only in Japanese.
• Deloitte New Zealand has admitted three new partners, bringing the firm’s number of full equity partners to 77. Brendan Lyon will become a partner in the risk and assurance team, Shari Carter will be a partner in the accounting and advisory team and Richard Kirkland will be a partner in the enterprise risk services team.
• The Australian Auditing and Assurance Standards Board has issued Guidance Statement (GS) 008 The Auditor’s Report on a Remuneration Report Pursuant to Section 300A of the Corporations Act 2001.
In complying with the guidance, the auditor’s report will now have two distinct sections: the conventional section that includes the auditor’s opinion on the financial report; and a new section, which contains the auditor’s opinion on the remuneration disclosures in the directors’ report.
• Ernst & Young Australia (E&Y) and a group of influential chief financial officers have produced a guide to help companies prepare non-statutory reports. The guide is a response to a growing trend for Australian companies to produce narrative-based reports because annual reports are becoming too complex.
• Australian consolidator WHK Group has acquired four new businesses under ‘tuck-in’ arrangements with existing member firms. The combined acquisitions bring A$5.5 million ($5.3 million) in annual revenue to the stock exchange-listed member of Horwath International.
Africa, Middle East, South Asia • A memorandum of understanding is to be formulated between the United Nations Educational, Scientific and Cultural Organization and Middle East professional services group the Talal Abu-Ghazaleh Organization (TAGorg). The memorandum will draw up a comprehensive strategic plan for co-operating in capacity-building in the Arab region. This will include education, qualification and training in the public and private sectors. TAGorg chairman Talal Abu-Ghazaleh said: “TAGorg’s policy is dependent on capacity-building as a culture whose main beneficiary is those who own it and not who provide it.”
• The Institute of Chartered Accountants of Pakistan (ICAP) has adopted the revised International Federation of Accountants (IFAC) Code of Ethics with some amendments. In announcing the move, the ICAP noted: “[The] replacement of Section 9 (now Section 290) of ICAP Code relating to independence, which is one of the significant changes in the revised IFAC Code, was already approved and implemented by the [ICAP] Council in its 171st meeting held on 29 April 2005. In the revised IFAC Code there is no significant change in the section relating to independence.” The code is effective for Pakistani chartered accountants on 1 January 2009. Section 290 is applicable to assurance engagements when the assurance report is dated on or after 1 January 2009.
• The first distance learning centre to offer the Association of Accounting Technicians (AAT) accounting qualification has opened in Cape Town, South Africa. The UK-based AAT’s accounting qualification is offered at centres in Cape Town, Centurion and Johannesburg, however, the distance for many students to get to these centres previously imposed a physical barrier to being able to study the AAT.
According to the AAT, the South African Institute of Chartered Accountants has supported the UK-based association offering its diploma in South Africa to help fill a gap in the accounting technician market.
• The Dubai Financial Services Authority (DFSA) has entered into a Memorandum of Understanding (MoU) with the Financial Services Board of South Africa (FSB). The signing took place between DFSA chief executive David Knott and FSB executive officer Rob Barrow during the annual conference of the International Organization of Securities Commissions (IOSCO) in Paris recently. Knott said: “The Financial Services Board of South Africa is a valued member of IOSCO and a leading participant in the African and Middle East region, of which the DFSA is also a member. Both the FSB and the DFSA are signatories to the IOSCO Multilateral MoU, having satisfied the highest standards of co-operation and assistance among IOSCO members.”
• The Talal Abu-Ghazaleh Organisation (TAGorg) has opened an office in the Dubai International Financial Centre (DIFC). TAGorg chairman and chief executive Talal Abu-Ghazaleh said establishing the office, the organisation’s 71st, will enable it to properly serve its clients in the DIFC with its full suite of professional services which range from covering economic and strategic studies to human resources and recruitment services.
• The UK Financial Reporting Council (FRC) has published guidance on the use of agreements between companies and their auditors to limit the auditor’s liability, as provided for under the Companies Act 2006. The guidance explains what is permissible under the 2006 Act; discusses what matters should be covered in an agreement and provides specimen clauses for inclusion in agreements; sets out some of the factors that will be relevant when assessing the case for an agreement; and explains the process to be followed for obtaining shareholder approval. The FRC will review the impact and content of the guidance in the second half of 2010 to ensure that it incorporates developments in generally accepted practice and any other new developments.
• FAR SRS, the professional institute for authorised public accountants in Sweden, has reached an agreement with the Association of Swedish Accounting Consultants (Sveriges Redovisningskonsulters Förbund – SRF) to give mutual recognition to members and co-operate more closely. FAR SRS has about 4,800 members. SRF, an 800 member book-keeping body, has previously partnered with FAR SRS to clarify book-keeping roles and responsibilities and to ensure consistent quality in the sector.
• The UK Accounting Standards Board has issued a financial reporting exposure draft (FRED) of improvements to UK financial reporting standards (FRS). The ASB has issued the FRED with the aim of seeking to maintain the existing levels of convergence between FRS and IFRS. The proposals include the same improvements to FRS as those made to IFRS where the UK standard is based on its international equivalent. The exposure draft also proposes improvements to FRS, as well as an update to UK IFRS-based FRS where the equivalent IFRS has been amended or updated. The deadline for comment is 27 September 2008.
• The UK Chartered Institute of Public Finance and Accountancy (CIPFA) has joined forces with the UK Department for International Development (DFID) to improve public financial management in the developing world. CIPFA and DFID are analysing the public financial management institutional framework and the effectiveness of systems that operate globally, regionally and at country level. DFID’s director general of country programmes Mark Lowcock said: “We believe that CIPFA is uniquely placed to contribute to the necessary improvement of international public sector accounting and auditing standards as well as professionalisation in developing countries.”
• BDO Numerica, the BDO member firm in Poland, has combined with the Polish member firm of Grant Thornton. It will merge it into an accounting practice with 350 professionals and combined fee income of €20 million ($31 million). BDO Numerica ranked as the largest accounting firm outside the Big Four in the International Accounting Bulletin’s inaugural survey of the Polish profession in March this year, with fee income to December 2007 of PLN45 million ($20.6 million). Grant Thornton was the seventh highest international affiliate, posting a significantly smaller fee income of PLN8.1 million.
North America, Latin America
• The US Securities and Exchange Commission (SEC) has launched an internal study to examine the best way financial information can be disclosed to meet the needs of all stakeholders. SEC chairman Christopher Cox said the regulator is investigating the way it acquires information from public companies, mutual funds, brokers and other regulated entities, and how it makes that information available to investors and the markets. “With so much new technology available to improve the quality of information for investors as well as the way investors acquire it, we’re initiating a broad, introspective look at our business model,” Cox said. The study will be led by William Lutz of Rutgers University in New Jersey.
• The US Securities and Exchange Commission has approved a one-year extension on the compliance date for smaller public companies to meet the Section 404(b) auditor attestation requirement of the Sarbanes-Oxley Act.
Smaller companies will now be required to provide attestation reports for fiscal years ending on or after 15 December 2009. The commission has also received approval to proceed with data collection for a study of the costs and benefits of Section 404 implementation, focusing on the consequences for smaller companies and the effects of the Section 404 auditor attestation requirements.
• A succession planning resource centre has been established by the American Institute of Certified Public Accountants (AICPA) to assist small- and medium-sized firms. Only 35 percent of multi-owner firms and 9 percent of sole owner firms have a written succession plan, according to a recent survey by the AICPA. The online resource centre will provide a variety of succession scenarios practitioners can work through, including selling the firm; merging the firm – including both downstream and upstream mergers; developing new leadership; and transitioning issues associated with retiring partners and value of the firm.
• The US Securities and Exchange Commission has charged a former partner at Ernst & Young US (E&Y), his friend, and his friend’s father in an insider trading scheme that resulted in nearly $600,000 of illicit profits. The charge alleged that from summer 2006 through to the autumn 2007, James Gansman, a lawyer and former partner in E&Y’s transaction advisory services department in New York, tipped his friend Donna Murdoch about the identities of at least seven different potential acquisitions of clients who sought valuation services from his firm. Gansman resigned from E&Y on 19 October 2007. E&Y told The Accountant: “The government alleges that Mr Gansman misappropriated confidential information from Ernst & Young about our clients. We have co-operated fully with the government throughout its investigation.”
• Jeffrey Thomson was officially appointed as the new president and chief executive of the US-based Institute of Management Accountants at the Institute’s annual conference. Thomson, who was previously the vice-president responsible for research and applications development, has been acting in the position since former leader Paul Sharman resigned in April this year.