• The Australian Accounting Standards Board (AASB) has released an amendment to AASB 2008-7 Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate.
The amendment responds to concerns regarding the initial measurement of cost, in accordance with AASB 127 Consolidated and Separate Financial Statements, in the separate financial statements of a new parent formed as a result of a specific type of reorganisation. It also responds to the retrospective determination of cost and applying the cost method in accordance with AASB 127 on first-time adoption of the Australian equivalents to IFRS. Use of AASB 2008-7 is mandatory from 1 January 2009. Early adoption is permitted.
• The Australian Securities & Investments Commission (ASIC) has outlined five key market issues it will be focusing on over the coming months, which specifically respond to concerns emerging from the current market conditions. Audit and accounting issues surrounding present valuation methodologies and disclosure for complicated financial assets were highlighted as areas of importance. ASIC commissioner Belinda Gibson said that with financial results for the year to 30 June due out, ASIC’s accounting team would also be focusing on valuation accounting, the correct treatment of off-balance sheet entities and correct classification of debt as current or long-term.
• The Japanese Institute of Certified Public Accountants has completed an English translation of Auditing and Assurance Committee Statement No. 82 Practical Guidance for Audits of Internal Control over Financial Reporting. The translation is to be used solely as reference material to aid in the understanding the original statement. For all application purposes, users are instructed to consult the original Japanese texts.
• The National Institute of Accountants (NIA) in Australia has helped launch a textbook comparing IFRS with Chinese Accounting Standards (CAS). The publication, entitled Brief on the IFRS and Comparison with the CAS, will be used as the core training material for the joint accountancy education programmes between the NIA and the China Enterprise Confederation/China Enterprise Directors Association. The author is Jianxin Wang, an accounting expert in the Institute of Finance within the China’s Ministry of Finance.
• The Japanese Institute of Certified Public Accountants has issued a report on ethics and a report on eXtensible Business Reporting Language (XBRL). The XBRL report sets out recommendations on changes to the process of preparing financial statements arising from the introduction of XBRL to the Electronic Disclosure for Investors Network (EDINET). Japanese companies are required to submit financial statements in XBRL to the EDINET for financial years beginning on 1 April 2008 onwards. The ethics report is aimed at helping improve the practical judgment of auditor independence.
Africa, Middle East, South Asia
• South Africa’s accounting and legal professions have agreed on interim measures to satisfy the compliance requirements of the Independent Regulatory Board for Auditors (IRBA) and the provincial law societies. The agreement involves standardising the format of the assurance report required for attorneys’ trust accounts.
Joint Attorneys’ and Accountants’ Committee chair Vincent Faris said the need to review and update the guidelines and audit procedures was identified because of the changing technological environment as well as the changes to international reporting standards and procedures. The IRBA is currently drafting a new set of guidelines, procedures and an audit report, which it anticipates will be effective from the end of February 2009.
• The Accounting Practices Committee at the South African Institute of Chartered Accountants has proposed changes to the standard AC 503 – Accounting for Black Economic Empowerment (BEE) Transactions, which brings the local standard in line with recent revisions to IFRS 2 – Share-based Payment. The changes are primarily expected to affect companies that have entered into BEE transactions with non-market performance targets, which are targets that are not linked to the company’s share price. The amendments are due to take effect for annual periods beginning on or after 1 January 2009.
• The Institute of Cost and Management Accountants of Bangladesh (ICMAB) recently held a discussion session on the economic impact of Cyclone SIDR, which devastated Bangladesh in November last year. The impact was outlined in a survey report titled Devastations Caused to the Bangladesh Economy by Cyclone SIDR-2007, presented by ICMAB past-president Nurul Hassan. The survey report estimated the total economic damage sustained by the Bangladeshi economy from the cyclone stood at BDT307.9 billion ($4.4 billion). Cyclone Sidr was estimated to have killed more than 3,000 people.
• UHY International has admitted a member firm in Israel. Shtainmetz-Aminoach & Co CPA has five partners, 65 staff and is based in Tel Aviv. It reported fee income of $4 million in its most recent financial year. Founded in 1987, the firm provides services in accounting and auditing, valuations, arbitrations, option loyalties and bonds, and management consultancy. It also specialises in international tax, complex Israeli tax planning, and taxation of pension and provident funds.
Shtainmetz-Aminoach & Co managing partner Amir Cahana commented: “We hope our membership of UHY will allow us to deliver premium client service, on a global scale, for the benefit of our international clients. Our clients currently span the Americas, Asia-Pacific, Europe, Middle East and Northern African regions. Joining UHY seems a natural step to take in order to achieve our business and client service objectives.”
• The UK Chartered Institute of Taxation (CIOT) has appointed its first chief executive. Peter Fanning will begin his new role in September. The new position is part of a restructuring within CIOT, which is aimed at developing opportunities and meeting the challenges faced by professional organisations and charities. These include the constraints on the time available from volunteers, increased competition and the retirement of senior professional staff. Fanning joins CIOT from the Office of Government Commerce, a subsidiary of HM Treasury, where he was acting chief executive. He has held a range of senior management roles across various sectors during the past 20 years.
• The UK Financial Reporting Review Panel has published revised operating procedures to improve the transparency of its enquiries. The changes follow public consultation and include setting out the way in which the panel manages conflicts of interests when appointing panel groups. The panel will now also take legal advice and discuss matters with the chairman of the Financial Reporting Council before writing a final letter to the chairman of a company indicating the panel’s intention to apply to court. The revised operating procedures apply to all cases where the panel’s initial letter is sent to the company on or after 1 September 2008.
• Wim Van der Stede is the new Chartered Institute of Management Accountants (CIMA) professor of accounting and financial management, replacing Michael Bromwich, who held the chair since 1985. In his new role, Van der Stede will be charged with contributing to the UK-based institute’s strategy by raising the profile of the profession and bridging theory and practice. Van der Stede is also a professor of management accounting at the London School of Economics and Political Science.
• The European Financial Reporting Advisory Group has expressed a number of concerns about the International Accounting Standards Board and US Financial Accounting Standards Board’s joint exposure draft covering chapters one and two of the boards’ proposed conceptual framework. In a draft comment letter to the standard setters, the group said the first two chapters should not be finalised until the whole framework is ready to be finalised. EFRAG suggested information that was relevant to the capital providers should usually be relevant to those managing that capital, and the framework could be improved by acknowledging that link.
• A discussion paper on the financial reporting of pensions has instigated more than 90 responses. The paper was issued in January this year under the Pro-active Accounting Activities in Europe initiative by the European Financial Reporting Advisory Group and a number of European standard-setters. It was intended to stimulate debate and influence international opinion on the reporting of pensions.
The UK Accounting Standards Board will now consider the responses and release a revised discussion paper next month. A report setting out final recommendations for consideration by the international and US accounting standards boards is anticipated in the second half of 2009. North America, Latin America
• The US CPA profession has launched a $15 million programme to help rectify a shortage of accounting professors. More than 70 of the largest US firms, along with several state CPA societies, have committed money to the programme, which will be administered by the American Institute of Certified Public Accountants (AICPA) Foundation.
Accounting Doctoral Scholars executive director Doyle Williams commented: “The average age of current accounting professors is around 55, which indicates that a real crisis is coming in the next decade.”
• Walter Smith has been elected national president and chief executive of the National Association of Black Accountants (NABA) for a two-year term. Smith, who is vice-president of financial reporting at Prudential Financial in Newark, New Jersey, said the board’s energy and drive over the next two years would be centred on galvanising the NABA and its stakeholders. Smith has been a NABA member for more than 20 years.
• The US Public Company Accounting Oversight Board (PCAOB) has adopted rules that will govern when a firm is allowed to succeed to the registration status of a predecessor firm following a merger or other change in the registered firm’s legal form. Under the Sarbanes-Oxley Act, a public accounting firm must be registered with the PCAOB in order to prepare, issue, or play a substantial role in the preparation or furnishing of audit reports. The rules are subject to US Securities and Exchange Commission approval.
• The American Institute of Certified Public Accountants (AICPA) and the US-based Texas Tech University’s division of personal financial planning have announced plans for a joint agreement to develop a new educational programme that will lead to the AICPA’s Personal Financial Specialist (PFS) qualification. The new programme, called PFS Pathway, will officially start in June 2009.
• The US Financial Accounting Standards Board (FASB) has published a new guide intended to improve the quality and consistency of the financial reporting of endowments held by not-for-profit organisations.
FASB project manager Jeffrey Mechanick said: “The [guide] addresses issues that are very important to the not-for-profit sector, especially organisations with sizeable endowments and the users of their financial statements, such as donors, credit rating agencies and regulators. Organisations across the country now find themselves subject to increased public scrutiny on how they manage and use their endowments, which in many instances have seen tremendous growth over the past decade.”
• Company leaders must understand the impact of IFRS across their business and develop a plan for the accounting switch, according to a paper released by Deloitte US. International Financial Reporting Standards for US Companies: Planning for IFRS Adoption provides analysis of the planning process. The paper suggests taking a proactive approach to IFRS implementation, with particular emphasis on understanding the wider issues that go beyond accounting and financial reporting.