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August 27, 2009

Region round-up

ASIA-PACIFIC

The Indonesian Institute of Accountants (IIA) has issued a standard for Sharia transactions and a standard for non-publicly accountable entities.

IIA president Ahmadi Hadibroto said that as the largest Muslim country in the world, Indonesia should set an example of how to develop high quality Sharia accounting standards.

The standard for private entities is based on the draft version of the International Accounting Standards Board’s IFRS for SMEs. It is effective from 1 January 2011 but early adoption in 2010 is allowed.

• The Association of Southeast Asian Nations (ASEAN) Federation of Accountants (AFA) has encouraged its member bodies to implement IFRS for SMEs. The federation said small and medium and non-public interest entities form the backbone of the ASEAN economies.

“The introduction of IFRS for SMEs is a positive step towards enhancing quality of financial reporting without placing costly and unnecessary compliance burdens on the SMEs in the ASEAN region,” AFA president Pengiran Haji Moksin said.

The AFA includes member bodies from all 10 ASEAN countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

CPA Australia has launched a new CPA programme in Vietnam to celebrate the first anniversary of its presence in the country. Since launching the Vietnam office last year, the organisation has gained more than 130 associate and full members, plus more than 2,000 students.

“As the world emerges from recession, professionally qualified accountants will be in greater demand than ever before, as will the demand for accounting firms in Vietnam,” CPA Australia chief executive Geoff Rankin said.

The Malaysian Institute of Accountants (MIA) has elected Abdul Rahim Abdul Hamid as its sixth president. He succeeds Nik Hasyudeen, who has retired following the completion of his term. Hamid previously served as the institute’s president from 2005 to 2007. His professional career includes more than three decades in public practice, including a stint as deputy executive chairman at PricewaterhouseCoopers Malaysia.

Christina Constance Foo has been appointed MIA vice-president. She is currently a member of the board of directors of CPA Australia and immediate past president of its Malaysia division.

The Institute of Certified Public Accountants of Singapore (ICPAS) and CPA Australia have renewed their mutual recognition agreement. Through the arrangement, ICPAS and CPA Australia agree to reciprocal admission of appropriately qualified members.

NORTH AMERICA, LATIN AMERICA

• Daniel Goelzer has been appointed acting chairman of the US Public Company Accounting Oversight Board (PCAOB). He succeeded Mark Olsen on 1 August. Goelzer is a founding and current member of PCAOB. He previously served as general counsel of the Securities and Exchange Commission (SEC) and has held the offices of executive assistant to the SEC chairman and associate general counsel in the office of the general counsel. Earlier in his career, he worked as an auditor at Deloitte US.

• The CPA mobility law has been passed by 45 jurisdictions across the US as of this month, according to the American Institute of Certified Public Accountants (AICPA). The legislation allows CPAs and CPA firms to serve their clients across state lines with minimal licensing barriers. The regions that have yet to allow out-of-state CPAs to practice are California, New York, Massachusetts, Alaska, Hawaii, Virgin Islands, Washington DC, Guam and Puerto Rico.

• The US Financial Accounting Standard Board (FASB) has tentatively decided that financial instruments whose fair value changes are recognised in net income should be separately presented on the balance sheet from financial instruments whose fair value changes are recognised in other comprehensive income. Entities would be required to present the fair value amount on the balance sheet. Entities could present on the balance sheet or disclose in the notes the amortised cost amount and the fair value adjustment amount related to the instruments in addition to the fair value.

• A former Deloitte US audit partner has been fined for helping Navistar Financial Corporation, a unit of the truck manufacturer Navistar International, avoid restating its erroneous 2003 financial statements. Thomas Linden was ordered by the PCAOB to pay $75,000 and has been barred from practice.

• The PCAOB has voted to adopt Auditing Standard No 7, Engagement Quality Review (EQR) and is seeking comment on a proposal requiring audit engagement partners to individually sign off the audit report.

The EQR provides a framework for the engagement quality reviewer to objectively evaluate the significant judgments made and related conclusions reached by the engagement team in forming an overall conclusion.

The audit engagement proposal says any requirement for audit engagement partners to sign an audit report would be in addition to the existing requirement for the audit firm to sign its name on the reports.

• The Canadian Institute of Chartered Accountants has published a document to help increase awareness among corporate board members about business impacts and governance issues associated with climate change. The publication provides a series of questions corporate directors can ask relating to the business implications of climate change.

• The PCAOB is seeking nominations for a new investor advisory group. PCAOB member Steven Harris will chair the group.

• The FASB and XBRL US have completed a revision of the eXtensible Business Reporting Language (XBRL) US GAAP Taxonomy so that it reflects the FASB Accounting Standards Codification released last month. In 2008, the FASB created an XBRL project team that worked closely with the XBRL US team to produce the new taxonomy. The project involved a review of the authoritative references in the current taxonomy and the team subsequently added the related codification references. Public companies will now be able to link directly from the taxonomy extension to the specific codification reference as posted on FASB’s codification website.

EUROPE

• Claims of Big Four firms approaching rival clients and offering cheaper audit fees are causing a stir in the Netherlands. PricewaterhouseCoopers (PwC) claimed in Dutch newspaper Financieele Dagblad that some of its clients were approached by Ernst & Young (E&Y) with significantly reduced quotes for carrying out audit work.

The spat arose partly due to disclosure rules that came into effect this year and require listed companies to reveal how much they paid for audit, tax and other advisory work. E&Y Netherlands country managing partner Pieter Jongstra said undercutting rival’s audit fees was not an E&Y strategy but clients had demanded fee reductions of up to 30 percent in some cases. He added the firm maintains “contact with all major organisations in the Netherlands”.

• The UK Auditing Practices Board (APB) has issued a revision of Practice Note 15 (I) The audit of occupational pension schemes in Ireland for comment. The current guidance, issued in December 2005, has been updated due to changes in the regulatory environment for pensions in Ireland.

• The UK’s second-highest fee earning firm, Deloitte, has reported a 2 percent drop in annual gross revenue to £1.97 billion ($3.3 billion) in 2009, an indicator of how badly firms are being affected by the financial crisis. The drop is the second by a major firm in consecutive weeks, following major US mid-tier firm BDO Seidman’s decline of 6 percent to $620 million in the year to 30 June 2009.

• There is a good standard of corporate reporting in the UK according to the Financial Reporting Review Panel’s annual activity report. The report is based on reviews of reports and accounts prepared for the year ended 31 March 2009. Of the 326 sets of accounts reviewed, 112 companies were approached by the panel for further information or explanation. Of these, 68 companies have, to date, undertaken to reflect the panel’s comments in their future reporting. Two companies agreed to restate comparative amounts in their next set of annual financial statements.

• Accountancy is one of several professions that is becoming more, not less, socially exclusive over time, according to a recent UK government report into social mobility. Unleashing Aspiration – The Final Report of the Panel on Fair Access to the Professions found that a typical professional born in 1958 came from a family that earned 17 percent more than the average family income. But for those born in 1970 the family income gap between those who went on to pursue a professional career and the average family had risen to 27 percent with accountancy seeing one of the biggest shifts to more social exclusivity.

• The Institute of Chartered Accountants of England and Wales (ICAEW) has awarded Stephen Zeff honorary membership in recognition of his contribution to the accounting profession. Zeff is the past president of the American Accounting Association, member of the European Accounting Association and a member of the UK Accounting Standards Board’s academic panel. He has also contributed to the ICAEW’s international work.

• The ICAEW and the Chamber of Financial Auditors of Romania (Camera Auditorilor Financiari din Romania – CAFR) have signed a new Memorandum of Understanding. The agreement states the two bodies will work together on activities for students and members, share expertise and experience on international and EU-related technical matters and undertake joint initiatives targeting governments and regulators.

 

AFRICA, MIDDLE EAST, SOUTH ASIA
 

South Africa’s Accounting Practices Board (APB) has adopted the International Accounting Standards Board’s (IASB) new IFRS for SMEs, becoming the first country to do so. All non-publicly accountable entities can use the new standard immediately.

South Africa took the usual step last year of adopting IFRS for SMEs in draft form. Previously all entities in South Africa, regardless of size, were required to use full IFRS. This presented a huge burden on SMEs. The final IFRS for SMEs was issued by the IASB on 9 July. The APB decision was reported on the Deloitte IAS Plus website. The webmaster of IAS Plus is Paul Pacter, who is also the IASB’s director of standards for SMEs.

• India’s Ministry of Corporate Affairs has set up a committee to address implementation challenges related to the convergence of Indian Accounting Standards with IFRS. Convergence is due by 2011.

The Ministry of Corporate Affairs Secretary, Anurag Goel, will chair a core group, which will be assisted by two sub-groups.

The first sub-group will be chaired by National Advisory Committee on Accounting Standards chairman YH Malegam. This group has been charged with identifying changes that must be made to various laws, regulations and accounting standards to facilitate convergence with IFRS and to prepare a clear road map for these changes.

The second sub-group will be chaired by Infosys director Mohandas Pai. It will be comprised of a number of chief financial officers (CFO) who will interact with stakeholders to identify concerns related to IFRS convergence, identify problem areas and establish how prepared stakeholders are for convergence.

The first meeting of all three groups was held recently. At the meeting, the Institute of Chartered Accountants of India reported that the convergence project is on track for completion.

The CFO sub-group reported there are some concerns from smaller companies.

They also requested amendments to the Companies Act and other regulations and asked for early exposure of accounting standards that are IFRS compliant, to help them to prepare for meeting the conversion deadline.

• The Jordanian Association of Certified Public Accountants and the Association of Chartered Certified Accountants have signed a Memorandum of Understanding to strengthen co-operation between the two bodies. The agreement will benefit the exchange of information between the two organisations, particularly related to the accounting profession.

The institutes will continue to work together in areas including research and technical consultancy, quality control practices, professional development and issues relating to institutions, small and medium-sized enterprises.

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