FCA Manish Iyer

Welcome to AIISAA

2011-04-23T12:59:00.000+05:30

Comments on Exposure Draft on Insurance Contracts issued by IASB

2010-11-06T05:22:00.000+05:30

Question 1: Relevant information to users: Paragraph 13:

Para 13 requires an insurer to recognise either an insurance contract liability or an insurance contract asset when the insurer becomes a party to the contract. This amounts to offsetting of assets and liabilities. In our view, such offsetting does not produce relevant information about the insurer’s cash flows for making economic decisions. Offsetting of an asset and a liability is permissible when the parties to the contract have a legally enforceable right to settle the contract on net basis and intend to do so. In case of an insurance contract, the insurer receives a separate set of cash inflows representing premiums and a separate set of cash outflows representing claims, benefits to the policyholder and directly attributable costs. Para BC14 gives examples of the various types of cash inflows and outflows related to an insurance contract. Thus, neither the insurer nor the policyholder have a legally enforceable right to settle the contract on a net basis. Also neither of them intend to do so. The recognition principle should require recognition of insurance contract asset and insurance contract liability when the insurer becomes a party to the contract.

Para 14 states when an insurer is said to become a party to the contract. In our view, clause (b) of Para 14 is redundant one. An insurer becomes exposed to risk under the contract only when the contract is legally enforceable one. A legally enforceable contract requires all the parties privy to the contract to be bound by the terms of the contract with separate and clearly defined rights and obligations. Thus, it is extremely difficult to understand the situation where an insurer is exposed to risk under an insurance contract but is not bound by its terms. If the insurer is not bound by its terms and becomes exposed to risk under the insurance contract, the exposure represents a possible obligation under a future insurance contract as per para 15 which would not fall within the boundary of an insurance contract as defined in Para 27 and thus would be a contingent liability that requires disclosure as per IAS 37, “Provisions, Contingent Liabilities and Contingent Assets”. In our view, an insurer should be deemed to become a party to the contract when the insurer is bound to any of the terms of the contract.

Question 2(a): Fulfilment Cash Flows: Initial Measurement:

We do not agree that the measure of an insurance contract should include expected present value of the future cash outflows less future cash inflows as stated in Para 17(a). This is offsetting of rights and obligations under an insurance contract. Neither of the parties have a legally enforceable right to settle the rights and obligation on a net basis. Also, neither of the parties intend to settle on a net basis. In our view, measurement of an insurance contract should reflect the rights and obligations arising under the contract separately. Present value of cash inflows represents a resource that is controlled by the entity which arises due to the entity entering into insurance contract and from which future economic benefits are to flow to the entity. Present value of cash outflows represent present obligation arising from the obligating event that makes the entity bound by the terms of the contract and from which outflows representing economic benefits are to flow from the entity. The present value of cash inflows is subject to impairment. We agree with the expected loss model of impairment and hence the present value of cash inflows will include the uncertainties arising as to the amount and timing of cash flows.

Question 2(b):

The draft application guidance in Appendix B on estimates of future cash flows is at the right level of detail

Question 3(a): Discount Rate:

We agree that the discount rate used by the insurer for non-participating contracts should reflect the characteristics of the insurance contract liability and not those of the assets backing that liability. However, the replicating portfolio technique is easier said than done. It is difficult to find a replica of entity’s portfolio of insurance contracts. A replica of embedded derivatives which are not insurance contracts might be possible to identify. The Board should provide further guidance on what is means by replicating portfolio technique.

Question 3(b):

We agree with the proposal to consider the effect of liquidity. However, as stated above, the replicating portfolio requires further guidance.

Question 3(c):

The concerns that the proposed discount rate may misrepresent the economic substance of some long-duration contracts are not valid for reasons stated in the basis for conclusions. However, finding a discount rate for long duration contracts could be problematic affair. Further guidance on identifying replicating portfolio for such contracts is required. The Basis for Conclusion highlights that some respondents to the discussions paper viewed some long duration contracts to be similar to the defined benefit retirement plans. We agree to this view. The Board should consider in more detail why it cannot use the discount rate specified for Defined Benefit Plans.

Question 4: Risk Adjustment versus Composite Margin:

We support using an explicit risk adjustment but not residual margin.

Question 5(a): Risk Adjustment:

We agree that the risk adjustment should depict the maximum amount the insurer would rationally pay to be relieved of the risk that the ultimate fulfilment cash flows exceed those expected.

Question 5(b):

We agree to the techniques allowed for estimating risk adjustments. We believe that actuarial profession is best equipped to address the best technique for estimating risk adjustments.

Question 5(c):

We agree that if either the CTE or the cost of capital method is used, the insurer should disclose the confidence level to which the risk adjustment corresponds because the estimate of confidence level is one of the requisite for application of CTE or cost of capital technique.

Question 5(d):

We agree that an insurer should measure the risk adjustment at a portfolio level of aggregation as it reflects the business model of an insurer.

Question 5(e):

The application guidance in Appendix B on risk adjustments are at the right level of detail.

Question 6: Residual / Composite Margin:

Para 17(b) states about recognition of residual margin, which is kept as an off-balance sheet item, whenever the present value of cash inflows is higher than the present value of cash outflows. This should be discouraged. Standards should be developed to lessen the off-balance items. In our view, instead of accounting on margin basis which represents offsetting of rights and obligations, present value of cash inflows adjusted for uncertainties arising as the amount and timing of cash inflows and present value of cash outflows should be measured separately. We do not agree with the margin accounting as proposed in the Exposure Draft on Insurance Contracts.

Para 20 requires an insurer to determine the residual margin at a level that aggregates insurance contract into a portfolio of insurance contracts and, within a portfolio, by similar date of inception of the contract and by similar coverage period. In our view, firstly the accounting on margin basis is not proper. Secondly, even if the margin accounting is adopted, it is difficult to understand what the board intends by “similar date of inception”. Date of two insurance contracts can be same but not similar. The Board is requested to provide further guidance on why it has used the word “similar” for date of inception.

We do not agree with the residual margin creation itself as it creates an off balance sheet item and has no conceptual basis. It is difficult to understand unrecognised residual margin as a liability, the decreases in which result in income. The Board should provide guidance on how the residual margin satisfies the definition of a liability. Instead of recognising and measuring on margin basis, we prefer separate recognition of assets and liabilities but presenting them net to show their relationship. This would also remove the requirement to create a residual margin and the interest accretion on the same which would be notional without any basis. The residual margin is as such a notional figure having no conceptual basis and requiring accretion of interest to such notional figure is not proper.

Question 7: Acquisition Costs:

We agree that incremental acquisition costs for contracts issued should be included in the initial measurement of the insurance contracts as contract cash outflows and that all other acquisition costs should be recognised as expenses when incurred.

Question 8: Premium Allocation Approach:

The Board should permit but not require a modified measurement approach for the pre-claims liabilities of some short-duration insurance contracts. We agree with the proposed criteria for requiring that approach and with how to apply that approach.

Question 9: Contract boundary principle:

We agree with the proposed boundary principle. However, for insurers to apply it consistently, more illustrations on its application should be given.

Question 10: Participating Features:

We do not agree with the proposed definition of a discretionary participation feature. In our view, the definition as existing in IFRS 4 should be carried forward. The measurement of insurance contracts should not include discretionary participating benefits as the participating benefits satisfies the definition of an equity instrument and thus is a financial instrument. Hence, financial instruments with discretionary participation features should be within the scope of IASB’s financial instruments standards. In our view, as the discretionary participation benefits are not part of insurance contracts, there is no necessity to carve out an exception to the principle of boundary of an insurance contract as specified in para 64. We strongly disagree with the creation of a notional figure as residual margin.

Question 11: Definition and Scope:

We agree with the definition of an insurance contract and related guidance, including the two changes summarised in BC191. We agree with the scope exclusions in para 4. We agree that the contracts currently defined in International Financial Reporting Standards as financial guarantee contracts should be brought within the scope of the IFRS on insurance contract in view of the following two reasons:

1. To reflect substance over form

2. To reduce the complexity in financial instruments standards. This is achieved as the exception measurement principle for such contracts in IFRS 9 or IAS 39 would no longer be required

Question 12: Unbundling:

In our view, unbundling should be required only when there is no arbitrariness involved in the process.

Question 13: Presentation:

The proposed summarised margin presentation would be useful to users of financial statements as it represents the way the business is conducted and risks are managed. We agree that an insurer should present all income and expense arising from insurance contracts in profit or loss as such income and expense arise from core operations of the business.

Question 14: Disclosures:

We agree with the proposed disclosure principle. The proposed disclosure requirements will meet the proposed objective.

Question 15: Unit-linked contracts:

We agree with the proposals on unit linked contracts.

Question 16: Reinsurance:

We support an expected loss model for reinsurance assets.

Question 17: Transition and effective date:

We agree with the proposed transition requirements in view of its practical applicability. In our view, there is only one margin that is risk adjustment which should be explicit. As stated previously, we strongly oppose the recognition and interest accretion on residual margin. It is necessary for the effective date of the IFRS on insurance contracts to be aligned with IFRS 9. The exposure draft on Insurance Contracts, Revenue from Contracts with Customers and Leases should be aligned with IFRS effective date as they represent the entire gamut of revenue recognition principles. Also, having regard to unbundling of investment and insurance elements, discretionary participation benefits being considered as financial instruments and overlapping requirements for financial guarantee contracts, it becomes essential that the effective date of the standard on Insurance Contracts is aligned with that of IFRS 9.

IASB and FASB jointly issue Exposure Draft on Leases

2010-08-23T13:18:00.001+05:30

IASB and FASB jointly issued an exposure draft on Leases. The new standard would replace IAS 17 "Leases" under IFRSs. To cut the long story short, we can say that IASB is "Back to Pavilion" in cricketing terms. Before the standard on Leases was formulated, lease rights were treated as intangible assets. This is what IASB and FASB is proposing. This proves that "Old is Gold". However, IASB wants the rights to use assets to be classified as tangible assets. It does not seem logical. The new standard seeks to bring significant changes to the lease accounting especially for lessees. The main changes are as below:
1) No lease classification: Leases will no longer be classified into operating and finance leases. All leases would be accounted similarly in the books of the lessee. The lessee would recognise an intangible asset of right to use asset at the present value of lease payments
2) Risks and rewards approach retained: The proposed standard on lease retains the risk and rewards approach for lease accounting by lessors. If significant risks and rewards are transferred to the lessee, the lessor is required to follow derecognition approach, that is, derecognise assets and recognise right to lease receivables in its statement of financial position. If significant risks and rewards are not transferred, the lessor shall adopt performance obligation approach. Under performance obligation approach, the lessor shall recognised right to receive lease receivables and a liability to permit the lessee to use the asset. Thus, in case of performance obligation approach, both lessors and lessees will recognise depreciation / amortisation expenses. It is to be seen how income tax deals with this situation.
3) Lease term: The ED proposes that lessees and lessors shall estimate the lease term as the longest possible lease term that is more likely than not to occur.
4) Contingent rentals: Lessees are required to include an estimate of contingent rentals in the lease cash flows at the inception of the lease. Lessors are also required to include the same provided they can be measured reliably. In my view, this is a controversial aspect of the standard and might result in higher volatility in Statement of Comprehensive Income. The Contingent rentals should not be included in the lease payments on estimate basis. The cash flows expected to arise from such contingent rentals can be taken to disclosures to inform investors on future cash flows.
5)Residual Value Guarantees: Lessees and lessors both shall include residual value guarantees in the estimate of lease payments.
6) Short-term leases: The ED contains simplified accounting requirements for leases having lease term of 12 months or less as for such leases, lessees need not calculate present value and recognise interest.

In my view, the lease standard should specify the scope, definitions, initial recognition and measurement of lease assets and lease liabilities, subsequent measurement of lease liabilities , presentation of lease asset and lease liabilities and disclosure in notes. The subsequent measurement of lease assets should be governed by IAS 38, IIntnagible Assets". I invite comments on my views.

Issue on application of IFRS 1 more than once by an entity posted to IFRIC

2010-08-06T15:56:00.001+05:30

IFRIC Potential Agenda Item Request
The Issue: Issue on IFRS 1:
Can an entity adopt IFRS twice in its history and once in each jurisdiction in which the entity’s shares are listed?
An entity X has its shares listed in X country, Y country and Z country. Entity X is domiciled in country X and is reporting as per country X’s GAAP. For investors in country Y, it adopted IFRS in 2005 for the first time and applied IFRS 1 and published its first IFRS financial statements making an explicit and unreserved statement of compliance with IFRS. The IFRS financial statements are not published in country X. The IFRS financial statements are published only in country Y. In country Z, the entity reports as per country Z’s GAAP.
In 2007, the entity delists its shares from country Y’s Stock Exchange. Now, entity X has to report as per IFRS in country X from 2011.
Would IFRS 1 be applicable to the entity in country X? If one sees the immediately preceding financial year, the entity had not published any financial statements making an explicit and unreserved statement of compliance with IFRS.
If entity X cannot apply IFRS 1 as it has published financial statements previously in its history making an explicit and unreserved statement of compliance with IFRS, which standard would provide the required information to the Indian investors on transition from Indian GAAP to IFRS?
If entity X has changed its systems after getting the special permission from Singapore Stock Exchange or after delisting its shares and is not able to call the previous IFRS numbers, how should it account for the adjustments from Indian GAAP to IFRS?
Current Practice:
There is a wide divergence in current practice.
1. Application of IAS 8:
Some are giving weight to Para 3 of IFRS 1 and applying IAS 8 for the adjustments. In this case, where the systems are not available the entities are using the local GAAP figures on the premise that retrospective restatement is impracticable. The investors are not provided with reconciliations as required by IFRS 1 as according to the entity, IFRS 1 is not applicable.

2. Application of IAS 8 with reconciliations as per IFRS 1:
Some professionals who give weight to Para 3 of IFRS 1 and applying IAS 8 for the adjustments give reconciliations as required by IFRS 1 though IFRS 1 is not applicable. This is done as per the requirement of Para 112(c) of IAS 1.
3. Application of IFRS 1:
Some professional give weight to Para 3(a)(1) of IFRS 1 and apply IFRS 1 as the immediately preceding financial statements were published under national GAAP without making any explicit and unreserved statement of compliance with IFRS. Thus, such entities would be enjoying the exemptions given in IFRS 1 for fair value adjustments, business combinations etc twice in its history.

Reasons for the IFRIC to address the issue urgently:
1. Looking to the current practice and views of professionals, it is noticed that there is a wide divergence in practice which needs to addressed immediately
2. IFRS is being adopted in different jurisdictions from different years. IFRS 1 and IAS 8 do not consider such an issue where IFRS is made applicable to an entity in different jurisdiction in different years. Thus, the issue is widespread and significantly diverging interpretations are emerging based on Para 3 and Para 3(a)(1) of IFRS 1.
3. The financial reporting would be significantly improved through elimination of the diversity emerging by making the financial statements more relevant, reliable and comparable to the users of those statements.
4. The issue, if one considers, is a narrow one on whether Para 3 should be applied or Para 3(a)(1) of IFRS 1. However, the issue is not that narrow to be inefficient to apply the interpretation process. Also, the disclosures for transition where IFRS 1 is not applicable by IAS 8 is made applicable also requires to be interpreted which is not addressed by any of the International Financial Reporting Standards.
5. The issue does not relate to a current or planned IASB project and there is a pressing need for guidance as soon as possible as many jurisdictions are adopting IFRS in phased manner.

AIISAA Network as on 03 December 2009

2009-12-01T13:17:00.003+05:30

Sr. No. Name Experience in man-months Location
1 CA Manish Iyer 82 Ahmedabad
2 CA Chintan N. Patel 96 Ahmedabad
3 CA Naresh J. Patel 296 Ahmedabad
4 CA Reecha J. Patel 65 Ahmedabad
5 CA Palak C. Patel 65 Ahmedabad
6 CA Akshat Vithlani 3 Ahmedabad
7 CA P. S. Kalani 550 Jaipur
8 CA S. D. Kalani 550 Pali
9 CA S. D. Jajoo 395 Kota
10 CA K. L. Jhanwar 322 Jaipur
11 CA P. C. Parwal 251 Jaipur
12 CA S. P. Jhanwar 248 Bhilwara
13 CA N. C. Akhawat 154 Pali
14 CA J. P. Somani 183 Jaipur
15 CA Vikas Gupta 156 Jaipur
16 CA Virendra Parwal 156 Jaipur
17 CA Sandeep Jhanwar 141 Jaipur
18 CA Anil Nuhal 138 Jaipur
19 CA Bhupendra Mantri 118 Jaipur
20 CA Navneet Jajoo 95 Kota
21 CA Varun Bansal 45 Jaipur
22 CA Shard Kalani 45 Pali
23 CA Rakesh Somani 36 Jaipur
24 CA Gautam Mutha 36 Jodhpur
25 CA M. P. Antia 474 Mumbai
26 CA N. D. Ankalesaria 437 Mumbai
27 CA R. N. Ankalesaria 267 Mumbai
28 CA Shreyas B. Chokshi 105 Ahmedabad
29 CA Sanjay Kumar Kothari 71 Hyderabad
30 CA Abhay Jain 71 Hyderabad
31 CA Ritesh Mittal 71 Hyderabad
32 CA Devanshi Gandhi 8 Siddhpur
33 CA Tirth Ajani 8 Siddhpur
34 CA Rahuldeo Patel 162 Ankaleshwar
35 CA Jignesh J Shah 226 Ahmedabad
36 CA Ajay R. Mody 327 Ahmedabad
Total Experience in Man-months 6475

AIISAA's strength

2009-11-25T15:27:00.000+05:30

AIISAA - The Ultimate KPO's strength lies in its panel of professional advisors. The average experience per professional advisor is more than 7500 man-days. It should be noted that as on 20 November 2009, it was reported as being more than 5000 man-days. AIISAA welcomes CA Shreyas Chokshi and his partners in Ahmedabad and Mumbai in its team of professional advisors. Their joining AIISAA's panel of professional advisors has made AIISAA stronger in numbers as now we have 25 CAs in the panel of professional advisors, geographical spread as our network now includes Mumbai apart from Ahmedabad, Jaipur, Pali, Kota and Bhilwara and areas of expertise.

AIISAA - The Ultimate KPO is a concept where the small and medium practioners working under separate banners can come under one banner while maintaining their independent status. AIISAA invites all professionals CA, CS, ICWA, Lawyers, Actuaries, Chartered Engineers, Valuers, Doctors etc. to its panel of professional Advisors. To know more about joing AIISAA's panel of professional advisors visit http://docs.google.com/present/edit?id=0AevFW01AN8DHZGc0dndwa3FfMjJkbTlwN2hmNg&hl=en

IFRS 9: Financial Instruments

2009-11-20T15:57:00.000+05:30

IASB published IFRS 9 on 12 November 2009. The scope of IFRS 9 is limited to Classification and Measurement of Financial Assets. For classification and measurement of financial liabilities, impairment and hedging, one has to refer IAS 39 provisions. IFRS 9 specifies only two classes. Amortised cost and Fair Value. The mixed measurement model is better than full fair value approach that FASB is advocating. To classify a financial asset at amortised cost, it has to satisfy business model test and cash flow characteristics test. If any of the two conditions are not satisfied, the financial asset would be classified as at Fair Value. The business model test is not on instrument to instrument basis whereas the cash flow test is on instrument to instrument basis. Again for assets that are at Fair Value, an entity has an irrevocable option on instrument to instrument basis in case of equity instruments not held for trading to park fair value changes in OCI. IFRS 9 has retained the fair value option category for accounting mismatches only. Early adopters need not present comparatives. Mandatory adopting by 1 January 2013. By that time, IASB will be completing the remaining phased of financial instruments project along with the insurance project.

New IFRIC Extinguishing Financial Liabilities with Equity

2009-11-20T15:33:00.000+05:30

The IFRIC has recently finalised an interpretation on Extinguishing Financial Liabilities with Equity. The final draft is pending for approval of IASB. As the title suggests the interpretation clarifies the flollowing:
1. Whether equity instruments issued in exchange for financial liabilities that were not in terms of the original contract is "consideration paid" in accordance with Para 40 of IAS 39 which deals with derecognition of financial liability?
Consensus: In this case, the IFRIC has consented that the equity instruments issued to extinguish all or part of a financial liability is consideration paid for the purposes of Para 40 of IAS 39.
2. What should be measurement criteria for equity instruments issued to extinguish such a financial liability?
Consensus: Measurement should be on the basis of the Fair Value of the Equity Instrument Granted except where such Fair Value is not measurable reliably, the equity instruments shall be measured at the measured at the fair value of all or part of the liability extinguished.
3.Where should the difference in the carrying amount of the financial liability extinguished and initial measurement amount of the equity instruments issued be presented?
Consensus: The difference to be presented in profit or loss as a separate line item

AIISAA's strength

2009-11-20T14:34:00.000+05:30

AIISAA - The Ultimate KPO's strength lies in its team. The team of AIISAA is growing and growing fast. The avg. experience of a professional advisor of AIISAA as on 20 November 2009 is more than 5000 man-days.

Presentation on IAS 1, 2, 7, 8 and 10

2009-10-28T19:46:00.000+05:30

The following presentations are now viewable from the blog http://aiisaa.blogspot.com:
1. IAS 1 - Presentation of Financial Statements
2. IAS 2 - Inventories
3. IAS 7 - Statement of Cash Flows
4. IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
5. IAS 10 - Reporting after the Reporting Period

Keep logging on to the blog to see further presentation on IFRS.

Presentation on IASB's Framework

2009-10-24T14:22:00.000+05:30

I am pleased to announce that a presentation on Framework for the Preparation and Presentation of Financial Statements issued by IASB is now viewable from the blog. Framework is not a standard but is the basis of all standards. It is the mother of all standards and interpretations. Mastering Framework's concept is mastering more than 50% of IFRS.

Indian AS vis-a-vis IFRS

2009-10-23T19:10:00.000+05:30

This is to inform that a presentation detailing differences between Indian Accounting Standards and IFRS can now be viewed from the blog.

Comment letter on Exposure Draft published

2009-10-21T12:32:00.000+05:30

This is to inform that the comment letter of AIISAA - The Ultimate KPO on Exposure Draft on Improvements to IFRS 2009 has been published on IASB's website. AIISAA - The Ultimate KPO has been the first organisation to comment on the same.

Comments on Discussion Paper relating to Amendments to the Listing Agreement

2009-09-23T20:38:00.000+05:30

Comment on Discussion Paper relating to amendments to the Listing Agreement
1. Requirement of professional qualification / financial literacy of CFO:
We agree to SCODA’s recommendations that the appointment of CFO for all listed companies shall be approved by the Audit Committee of the listed entity. However, some disclosures explaining how the Audit Committee performed this task should be added in the listed entity’s annual report.

2. Rotation of Audit firms / Partners:
 We do not agree with SCODA’s views with respect to rotation of partners every five years, because of the following reasons:
(a) All the partners are paid by the firm. The firm is the auditor of the listed entity and not the partner. The resources deployed for carrying out audit function is by the firm and not by the partner. Thus, it is unlikely that rotation of partners of a firm would dilute the conflict of interests that the firm has indulged in.
(b) Any partner is going to act in the interest of the firm. The firm’s interest is to retain the client. The partner’s interest is to achieve the revenue targets set by the firm. Each partner has a specified revenue target which they are pressurized to achieve to maintain the same standard of pay rise in the firm.
(c) Mere rotation of the partners within the same firm will not help to achieve the purpose of independence of the auditors.

 SCODA should look at the issue of conflict of interest and dilution of independence from this respect. We would recommend rotation of firms rather than partners in a firm. We do not understand why mandatory rotation of firms is not practical when there are so many audit firms. Empanelment of Public Sector banks is a good example of ensuring independence of auditors.

 How shall the Audit Committee ensure independence of the audit firms and its partners. Independence is a state of mind. Independence has to be practiced. Independence cannot be inspected. To ensure independence of audit firms and its partners SCODA / SEBI can suggest that the auditors of the listed entity do not take any consulting assignments that affect the numbers stated in the financial statements or the quarterly results. Auditors should be responsible for audit only. If auditors produce numbers and then audit those numbers themselves, where is the independence. This is what is happening now. For example, consulting assignments on Coversion from Indian GAAP to IFRS in a listed entity is being done by auditors of that listed entity.

Recommendations:
(a) SEBI should bring out a directive in this respect that auditors of a listed entity should not take any role that produces numbers, such as IFRS Conversion.
(b) Disclosures should be made in the Annual Report, how the Audit Committee ensured that the audit was performed in accordance with Standards on Auditing issued by Institute of Chartered Accountants of India.
(c) SEBI may issue directive that not to allow any annual reports or quarterly results to be filed that contain qualified reports.
(d) We also recommend that to ensure independence, each audit firm should have an external Accounting Standards / IFRS Advisor as required by Johannesburg Stock Exchange

3. Role of internal auditor of the company:
We agree to SCODA’s recommendations that it would not be prudent to mandate that the internal audit function may be carried out by an external audit firm. However, some disclosures in the listed entity’s Annual Report with respect to how the Audit Committee reviewed the internal audit function and whether the internal audit function satisfied the Standards on Internal Audit issued by Institute of Chartered Accountants of India should be added.

4. Modification in formats of limited review report and statutory auditor’s report:
No Recommendation : We agree with SCODA’s recommendations of additional disclosure in limited review report and statutory auditor’s report.

5. Voluntary Adoption of International Financial Reporting Standards by listed entities having subsidiaries:
Our view is that since the adoption of IFRS for consolidated accounts is voluntary till accounting period beginning on or after April 1, 2011, no restrictions on such voluntary adoption should be placed. Voluntary adoption should be voluntary for all listed entities. Had the proposal been of mandatory adoption of IFRS, the restrictions specified by SCODA could have been accepted.

6. Interim Disclosure of Balance Sheet by listed entities: No Recommendation
We agree to SCODA’s recommendations with regard to Half-Yearly Audited Balance Sheets to be published.

7. Timelines for Submission of financial results by listed entities: No Recommendation
We agree with the following recommendation of SCODA in this respect:
(a) Listed entities not having subsidiaries should be required to submit their quarterly and year to date unaudited stand-alone financial results accompanied by limited review report of the auditor within 45 days from the end of the quarter.
(b) Listed entities having subsidiaries which submit consolidated quarterly and year to date financial results in addition to stand-alone results shall continue to publish only consolidated financial results. However, the following items shall also be additionally published on a stand-alone basis, as a foot note:- (a) Turnover (b)Profit before tax (c) Profit after tax.

(c) Listed entities which opt to submit their annual audited results on a stand-alone basis in lieu of the last quarter un-audited financial results subject to limited review report by the auditors shall submit the annual audited results within 60 days from the end of the financial year.

(d) Listed entities having subsidiaries shall, in addition to submission of stand-alone annual audited financial results as mentioned at (iv) above, submit their consolidated annual audited financial results within 60 days from the end of the financial year.

(e) Listed entities that do not opt to submit their annual audited financials results within 60 days from end of financial year above shall submit their last quarter un-audited financial results accompanied by limited review within 45 days from the end of the quarter.

AIISAA's Comment letter to IASB of Improvements to IFRSs 2009 ED

2009-09-12T18:10:00.000+05:30

Sir / Madam,
Below are given our comments on amendments proposed in exposure draft on improvements to IFRSs 2009. We would be glad to provide any further information on our views expresses below.
▆ Comment on Proposed Amendment to IFRS 1 – First-time adoption of International Financial Reporting Standards
Para 27: Applicability of IAS 8 to first IFRS financial statements:
The proposed amendment to IFRS 1 making IAS 8’s requirements inapplicable in any of the entity’s reporting periods if such periods fall before the entity presents its first IFRS financial statements is not welcome. We give below the following reasons to substantiate our view:
 Para 11 of IFRS 1 make it clear that the adjustments in an entity’s opening IFRS statement of financial position due to changes in accounting policies that the entity uses as per IFRS and those that it used for the same date using its previous GAAP results from events and transactions before the date of transition to International Financial Reporting Standards. Therefore, an entity is required to recognise those adjustments directly in retained earnings (or, if appropriate, another category of equity) at the date of transition to International Financial Reporting Standards.

Thus the main focus of Para 11 is on the date of transition to IFRSs. The purport of Para 9 is that if an entity changes its accounting policies after the date of transition to International Financial Reporting Standards the requirements of retrospective application and the transitional provisions of new pronouncements would apply as per IAS 8 as the entity on that date would have already transited to International Financial Reporting Standards and therefore should not be recognised directly in retained earnings but in statement of comprehensive income as part of profit or loss.

Therefore, in our view, the proposed change would be in conflict with the requirements of Para 11 of IFRS 1.

 Para 27 of IFRS 1 stresses on the date of adoption of IFRS. Supposing an entity presents one year comparatives, an entity whose date of transition is 01 January 2010 would be adopting IFRS on 01 January 2011. Thus, to any changes in accounting policies that occur on 01 January 2011, IAS 8’s requirements would not be applicable and therefore no disclosures about changes in accounting policies would need to be presented in an entity’s first IFRS financial statements.

If we read Para 27 with Para 11, it comes out that IAS 8 will not be applicable for any changes in accounting policies till the date of adoption of IFRS. However, after the date of adoption of IFRS, any change would have to be recognised, measured and disclosed in accordance with International Financial Reporting Standards. Thus, if the entity, in the above case, changes its accounting policies on 01 July 2011, it has to apply IAS 8 to ensure that previous six months financials are in accordance with IFRS. This would also mean that if the transaction, event or condition was first effected after the date of transition to IFRSs, the effects of the change would have to be reflected either in the comparative period’s Statement of Comprehensive Income or current period’s Statement of Comprehensive Income.

 Para 7 requires an entity to use the same accounting policies in its opening IFRS statement of financial position and throughout all periods presented in its IFRS financial statements. Those accounting policies are to be compliant with each IFRS effective at the end of its first IFRS reporting period.

Thus, the purport of Para 7 is that same accounting policies should be used from date of transition to IFRS to date of first annual financial statements in which an entity makes an explicit and unreserved statement of compliance with IFRS. Let’s say an entity prepares interim financial reports by making an explicit and unreserved statement of compliance with IAS 34 every quarter except the last quarter. Also, suppose the entity would be presenting its first annual IFRS financial statements on 31 December 2011. Thus, its date of adoption would be 1 January 2011 and its date of transition would be 01 January 2010, assuming that the entity presents only one year as comparative. Thus, the entity would have to use same accounting policies from 1 January 2010 to 31 December 2011. Any change in accounting policy within these two dates would have to be applied retrospectively from 01 January 2010 and the effects of the same being recognised either on retained earnings as on 01 January 2010 and / or in statement of comprehensive income for the period ended on 31 December 2010 and / or statement of comprehensive income of the period ended on 31 December 2011.

Therefore, the amendment to Para 27 would be in conflict with Para 7 of IFRS 1.

 We draw attention to Para 18 of IAS 1 which categorically states that disclosures cannot rectify the use of inappropriate accounting policy. Once an entity adopts IFRS, it has to follow all International Financial Reporting Standards. The proposed amendment would make the interim financial reports presented in the periods of entity’s first IFRS financial statements less reliable and would defeat the objective of financial statements specified in the Framework for the Preparation and Presentation of Financial Statements.

 Rather than making entire IAS 8 inapplicable, it would be better to retain the current position that IAS 8’s disclosure requirements are not applicable. If entire IAS 8 is made inapplicable, all changes during the periods presented in an entity’s first IFRS financial statements would be effected prospectively. If previous GAAP too requires prospective application, then there would be no updation to reconciliations.
▆ Comment on Proposed Amendment to IAS 1 – Presentation of Financial Statements
Para 106: Statement of Changes in Equity
The proposed amendment to IAS 1 allowing flexibility in presentation of statement of changes in equity either as a separate component or in notes is not welcome. We give below the reasons to substantiate our view:
 Addition of one more presentation option would make the IFRS financial statements less comparable. Already there are many presentation options within IAS 1 which has been criticized by many. The Discussion Paper, “Preliminary Views on Financial Statement Presentation” states that alternative presentations make it difficult for users to compare financial information across entities. The Board should move towards reducing the presentation options rather than adding one more option.

 Statement of Changes in Equity is identified as a separate component of a complete set of Financial Statements by Para 10 of IAS 1 – Presentation of Financial Statements. Letting the Statement to be presented in the notes would result in it not being a separate component and thus in conflict with Para 10. In view of the above, we would like to keep the status quo, that is, to present Statement of Changes in Equity as a separate component and showing all changes in components of equity in that statement.

▆ Comment on Proposed Amendment to IAS 8 – Accounting Policy, Changes in Accounting Estimates and Errors
Para 10, 14 and 20:
The proposed amendment to IAS 8 to make the terminology consistent with the new framework that is not yet effective and is incomplete is not welcome at present. We give below the reason to substantiate our view:
“Haste makes Waste”. The board should amend IAS 8 terminology once the new framework is in place. Till that time, all the standards and interpretations are based and should be based on existing framework. Amending one particular standard to reflect the new framework and not others would make International Financial Reporting Standards internally inconsistent. Also, the new framework is still incomplete as it addresses only few aspects of financial reporting. Amending any standard on the basis of an incomplete framework which is not yet effective would be a haste that could result in waste.
▆ Comment on Proposed Amendment to IAS 27 – Consolidated and Separate Financial Statements
Para 38:
The proposed amendment to IAS 27 to give an option to classify investments in subsidiaries, associates and jointly controlled entities at Fair Value through Profit or Loss is not welcome. We give below the reasons to substantiate our view:
 Para 9 on Definition of Financial Asset or Financial Liability at Fair Value through Profit or Loss, Para 46(c) and Para AG80 and 81 of IAS 39 provide principles, rules and guidance on the circumstances when a financial instrument should be measured at cost. Thus, simply saying that investments in subsidiaries, associates and jointly controlled entities should be accounted in accordance with IAS 39 should suffice. We don’t understand the need to give an option of cost or fair value through profit or loss when both are to be accounted in accordance with IAS 39.

We do not see any need to specify a rule that all investments in subsidiaries, jointly controlled entities and associates should be either at cost or at fair value through profit or loss. It is enough to say that such investments should be accounted for in accordance with IAS 39. The board should provide further guidance for classification of such instruments in IAS 39 itself rather than specifying classification in a standard that neither deals with classification nor with recognition and measurement of financial instruments. All requirements for classification, recognition and measurement of financial instrument whether they be investments in subsidiaries, associates or jointly controlled entities should be contained in only one standard or a collection of standards that deal with financial instruments.

 Para 4(a), 2(a) and 3(a) of IAS 32, IAS 39 and IFRS 7 respectively, contain scope exemption for interests in subsidiaries, jointly controlled entities and associates when such interests are not derivatives and are accounted for in accordance with IAS 27, IAS 31 and IAS 28 respectively. We propose that these standards be amended to remove the scope exemption which would reduce complexity. Though the board is currently in a project to reduce complexity of financial instruments standard, this amendment should be made as part of annual improvements to the scope of financial instruments standards.

 We do not see any reason for not requiring investments in subsidiaries, associates and jointly controlled entities that are accounted for at fair value through profit or loss to be measured in accordance with IFRS 5 “Non Current Assets held for Sale and Discontinued Operations”. Para 15 and 15A require non-current assets held for sale to be measured at the lower of carrying amount and fair value less costs to sell. If the investment is measured at fair value with changes in fair value being recognised in the statement of comprehensive income as profit or loss, on classification of such investment as held for sale, the difference between the carrying amount and fair value less costs to sell would the costs to sell. Exempting a particular type of investment measured in a particular way from the requirements of IFRS 5 is a rule that introduces complexity without any corresponding benefits.

 In view of the above, we propose the following amendments:
o Amendment to Para 38 of IAS 27 to require all investments in subsidiaries, associates and jointly controlled entities to accounted for in accordance with IAS 39 in the Separate Financial Statements of an entity
o Amending Para 4(a), 2(a) and 3(a) of IAS 32, IAS 39 and IFRS 7 respectively to remove the scope exemption for interests in subsidiaries, associates and jointly controlled entities
o Removing the exception for investments in subsidiaries, associates and jointly controlled entities measured at fair value through profit or loss from applicability of IFRS 5 on their classification into held for sale.
▆ Comment on Proposed Amendment to IAS 28 – Investment in Associates
Para 1A:
The proposed amendment to IAS 28 to allow scope exclusion in Para 1 to a portion of an investment in associate is welcome as it is consistent with the business purposes for which the portions are held. However, it depends on management’s intention and hence has significant scope of being abused. Hence, we propose further guidance to be provided on circumstances when an investment can be separated into portions and when not.
Lastly, if the Board does not agree with our views expressed above, we request the Board to add further guidance and provide basis of conclusions for not agreeing with the above.

Thank you.

Regards,
CA Manish Iyer
IFRS Core Group Advisor
+919825286903

Seminar on Impact of IFRS Transition in India

2009-09-12T17:40:00.000+05:30

Video clipping of the Seminar on Impact of IFRS Transition in India have been attached to the blog.

Seminar on Impact of IFRS Transition

2009-08-29T13:04:00.003+05:30

It gives us immense pleasure in announcing that a Video CD of some of the clippings of Full Day Seminar on "Impact of IFRS Transition" conducted by AIISAA on 8th of August 2009 is available at free at cost.

A set of 3 DVDs with material of Full Day Seminar on Impact of IFRS Transition conducted by AIISAA on 8th of August 2009 is also available for purchase. You may choose to buy only DVDs or only material or both.

The seminar was an eye opener to create awareness on IFRS challenges. In the seminar, main focus was on case studies and comparative solutions of Indian GAAP and IFRS. While discussing the solutions, the principles on which those solutions were based were discussed. The topics covered were as under:
1. IFRS Overview
2.Presentation of Financial Statements
3.Changes in Accounting Policies, Prior Period Errors and Changes in Accounting Estimates
4. Business Combinations
5. Consolidated Financial Statements
6. Revenue
7. Foreign Currency Differences Accounting (with comprehensive case studies on Amendment to AS 11 on 31 March 2009)
8. Financial Instruments
9. Property, Plant and Equipment
10. Non-current assets held for sale and Discontinued Operations

The material contains the following:
1. Brief Profile of Faculties
2. Slides of Faculties
3. Case Studies with Solutions as per Indian GAAP and IFRS

The set of DVDs contain the following:
1. About AIISAA
2. Slide of Faculties
3. Explanation of the Solutions to Case Studies with relevant principles in IFRS

The Set of DVDs is available at Rs.500/- only and Material is available at Rs.250/- only. Add Rs.50/- for Postage in India outside Gujarat State and Rs.30/- for Postage in Gujarat State.

For further details and order booking contact Mr. Praveen Pareek +919898343242.

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503, Sahajanand,
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IFRS for SMEs

2009-07-10T12:39:00.003+05:30

The IASB has published IFRS for SMEs. It is not known how the countries who have adopted IFRSs for listed entities only and have kept their standards for other entities would adopt the IFRS for SMEs. The IASB believes that this is a significant event as all SMEs worldwide would be reporting under one financial reporting framework if IFRS for SMEs is adopted. In India, the ICAI has announced that IFRS would be applicable to all public interest entities from 1 April 2011 and to some other large entities. It is a challenge to the public interest entities to follow IFRSs. Now if the world goes for IFRS for SMEs, SMEs in India would also have to adopt the same one day. So be ready for the change as change is the only constant.

Management Commentary (MDA)

2009-06-24T20:10:00.002+05:30

IASB has published an exposure draft on management commentary popularly called Management Discussion and Analysis (MDA). Do keep logging on to this blog for further information on the same.

DP on Preliminary Views on Leases

2009-06-03T17:20:00.001+05:30

Scope of the Lease Standard:
The boards’ view to base the scope of the proposed new standard on leases on the scope of the existing standards does resolve time constraint issue. However, the scope exclusions should be considered to be changed. In author’s view any liability of lessee and any asset of lessor is an obligation to pay cash and right to receive cash respectively, thus satisfying the definition of financial instrument. Thus, all subsequent measurements of lessee’s obligations to make minimum lease payment including contingent rents and lessor’s right to receive minimum lease payment including contingent rents should be in accordance with IAS 39, “Financial Instruments: Recognition and Measurement”. The lease accounting standard should only deal with the following:
1. What all transactions are, in substance, lease transactions
2. Initial Recognition and Measurement
3. How to separately recognise and measure for the various elements embedded in lease contracts at the time of initial recognition.

DP on Preliminary Views on Leases

2009-06-03T17:14:00.002+05:30

Comment on Appropriateness of focussing only on Lessee Acocunting:
Looking to the advantages and disadvantages of deferring consideration of lessor accounting, the boards’ view of issuing a discussion paper focusing on lessee accounting is proper to a very limited extent. However, the board should come out with a discussion paper on lessor accounting soon. After looking at the comments received on both the discussion papers, the boards should come out with a combined exposure draft on leases accounting standard. It may be noted that the boards have adopted the similar approach for an improved conceptual framework on financial reporting which has been criticized by many. Also, the reason for deferring consideration of lessor accounting that lessor accounting interfaces with other standards like revenue and derecognition shows a lack of co-ordination amongst the various groups of the boards undertaking the projects. The boards have issued Discussion Paper on Revenue Recognition and Exposure Draft on Derecognition. All the groups should have sat together, discussed the issues interfacing each and come out with one solution that is applicable to all the interfacing standards. This solution could have been discussed in the discussion paper and comment sought for on the same.

IASB publishes draft guidance on Fair Value Measurement

2009-05-29T19:17:00.003+05:30

The International Accounting Standards Board (IASB) published for public comment an exposure draft of draft guidance on fair value measurement.

If adopted, the proposals would replace fair value measurement guidance contained in individual International Financial Reporting Standards (IFRSs) with a single, unified definition of fair value, as well as further authoritative guidance on the application of fair value measurement in inactive markets. The proposals deal with how fair value should be measured when it is already required by existing standards. They do not extend its use in any way.

To ensure consistency between IFRSs and US generally accepted accounting principles (GAAP), the proposals incorporate recent guidance on fair value measurement published by the US Financial Accounting Standards Board (FASB) and are consistent with a report of the IASB’s Expert Advisory Panel published in October 2008 on fair value measurement in illiquid markets.

This project forms part of a long-term programme by the IASB and the FASB to achieve convergence of IFRSs and US GAAP, as described in the boards’ Memorandum of Understanding published in September 2008. It is also consistent with requests from G20 leaders to align fair value measurement in IFRSs and US GAAP.

The IASB’s starting point in developing the exposure draft was the equivalent US standard, SFAS 157 Fair Value Measurements as amended. The proposed definition of fair value is identical to the definition in SFAS 157 and the supporting guidance is largely consistent with US GAAP.

Real Estate Construction Agreements

2009-04-21T11:47:00.002+05:30

IFRIC 15 deals with Real Estate Construction Agreements. The issues in those agreements were:

Whether revenue should be recognised as per IAS 11 or IAS 18?
Whether and at which stage components of the transaction have to be identified and separately recognised?

IFRIC 15 clarifies the above issues. If the buyer the able to specify major structural specifications or changes, the contract is covered under IAS 11 otherwise the contract is covered under IAS 18. However, before taking this decision, the entity has to identify the components involved such as sale of land alongwith construction. Sale of land will be recognised at fair value of the consideration received or receivable as per IAS 18. Further, if the construction agreement falls in IAS 18, the entity should determine whether it is only providing a service or providing goods alongwith the service. If the entity only provides service, POCM will apply as specified in IAS 11 otherwise the criteria for sale of goods in IAS 18 will apply.

New Lessee Accounting Model

2009-04-14T15:35:00.002+05:30

The IASB and FASB have jointly issued a discussion paper on lease accounting for lessees. The new model proposes asset and liability to be recognised by the lessee at the inception of the lease contract. It removes the classification of operating lease and finance lease. However, the discussion paper has left many questions/issues unanswered. In view of this, it is difficult to know whether the proposed lessee accounting model would go to become a new standard.

IFRIC clarifies the accounting for transfers of assets from customers

2009-01-29T12:21:00.000+05:30

The International Financial Reporting Interpretations Committee (IFRIC)∗ issued today an
Interpretation that provides additional guidance on the accounting for transfers of assets from
customers.
IFRIC 18 Transfers of Assets from Customers is particularly relevant for the utility sector.
It clarifies the requirements of International Financial Reporting Standards (IFRSs) for
agreements in which an entity receives from a customer an item of property, plant and
equipment that the entity must then use either to connect the customer to a network or to
provide the customer with ongoing access to a supply of goods or services (such as a supply
of electricity, gas or water). In some cases, the entity receives cash from a customer which
must be used only to acquire or construct the item of property, plant and equipment in order
to connect the customer to a network or provide the customer with ongoing access to a supply
of goods or services (or to do both).
IFRSs, in particular the principles in IAS 18 Revenue, have been interpreted differently and
the IFRIC was asked to provide additional guidance on the accounting for those transfers of
assets from customers. The interpretation clarifies:
􀂃 the circumstances in which the definition of an asset is met;
􀂃 the recognition of the asset and the measurement of its cost on initial recognition;
􀂃 the identification of the separately identifiable services (one or more services in exchange
for the transferred asset),
􀂃 the recognition of revenue;
􀂃 the accounting for transfers of cash from customers.
In response to the comments received on the draft Interpretation published in January 2008,
the IFRIC simplified the guidance on the recognition of an asset by referring to the IASB’s
Framework and added additional guidance on the recognition of revenue.
The Interpretation is effective for annual periods beginning on or after 1 July 2009 and
applies prospectively. However, limited retrospective application is permitted.

Changes to Consolidation principles

2009-01-27T11:56:00.003+05:30

IASB has issued an Exposure Draft on Consolidated financial statements. It seems that IAS 27 and SIC 12 will be withdrawn and IFRS 9 will be issued. The principles of SIC 12 have been embedded into the exposure draft. The definition of control has been revised from power to govern to power to direct. The term "Benefits" is the definition of control has been replaced by the term "Returns" to clarify that returns include both positive and negative returns. The concept of structured entities has been intoduced in place of special pupose entities.

Satyam - Facts and Fraud

2009-01-19T17:41:00.001+05:30

1. There are 7 firms with name Price waterhouse and 2 Firms with lovelock & lewes 2. All the Nine firms are members of PWC and PWC as such cannot practise in India 3. Mr. Talluri Srinivas & Mr. S Gopal Krishnan and Mr.Rama Krishna P are partners in Lovelock & Lewes 4. These 3 Chartered Accountants have signed for and on behalf of Price Waterhouse for several Companies such as GMR Infra, Lanco Infra and Satyam Computer Services Limited although they are not partners in Price Waterhouse 5. When we verified list of firms in the directory published by ICAI, the governing body of accountancy and auditing in India, we observed that fictitious partners are signing. 6. Moreover, the appointment of auditors of GMR, LANCO and Satyam, the address of the auditors firm is in Hyderabad, whereas as per the ICAI records none of the firms have Branch office at Hyderabad, this means that all the aforesaid companies have appointed a firm as auditors that does not exist as per the ICAI records. On further verification, we found that the firm has filed form 23B, form 23AC etc where in they submitted the firm PRICE WATERHOUSE BANGALORE's PAN Number. Price Waterhouse Bangalore has no branch office at Hyderabad. Nobody is able to understand how some one can file PW Bangalore's PAN number while the appointment by companies clearly states PW. 7. This anomaly might have existed for several years and never noticed by any of the statutory bodies including SEBI, Registrar of Companies, Income Tax Department, Stock Exchanges including SEC.
8. ICAI is not looking in this direction and simply issuing notices to a wrong firm. 9. The above infers that all the 100 odd companies for which Price waterhouse / lovelock & lewes audited are invalid and void ab-initio and SEBI as well as MCA should take immediate action as the investors at large of all the 100 odd companies have been misled by the Price waterhouse & lovelock & lewes

Satyam's Cash Flow Disclosures

2009-01-08T11:02:00.003+05:30

With the revelations made by Ramalingam Raju, once again the role of accounting standards have come in question. It is said that the cash flows reported by the company are not real cash flows. One of the reasons for using cash flow as fund flow is the indirect method of disclosing operating cash flows. AIISAA has always favoured the direct method of reporting cash flows from operating activities. It should be noted that the Discussion Paper on Financial Statement Presentation issued by IASB and FASB jointly allows only one method which is the Direct method. AIISAA opines that IASB and FASB should make immediate amendments to its standards on cash flow statements by allowing only one method that is the direct method.

Satyam's Revelations

2009-01-07T16:44:00.002+05:30

Mr. B. Ramalinga Raju, Chairman, Satyam Computer Servcies Ltd has with deep regret, and tremendous burden on his conscience, revealed the following facts:

1. The balance sheet carries as of September 30, 2008

a) Inflated (non-existent) cash and bank balance of Rs 5,040 crore (as against Rs 5361 crore reflected in the books)

b) An accured interest of Rs 376 crore which is non-existent

c) An understated liability of Rs 1,230 crore on account of funds arranged by me

d) An over stated debtor position of Rs 490 crore (as against Rs 2651 reflected in the books)

2. For the September quarter (Q2) we reported a revenue of Rs 2,700 crore and an operating margin of Rs 649 crore (24 per cent of revenues) as against the actual revenues of Rs 2,112 crore and an actual operating margin of Rs 61 crore (3 per cent of revenue). This has resulted in artificial cash and bank balances going up by Rs 588 crore in Q2 alone.

Online Issue based consulting on IFRS

2008-12-31T18:51:00.001+05:30

Now you can ask your issues on IFRS by clicking at the appropriate buttons. Following options are available:1. Single Issue on IFRS2. 12 Issues on IFRS for a month3. 130 Issues on IFRS for a yearNo worry of security as Paypal is fully secured site certified by Verisign. Make payment either through your Paypal Account or through your credit card or net banking account. On receipt of information of yours having made payment, we will contact you at the e-mail id provided while making payment within 24 hours. In reply to that mail, you mail mail us your queries / issues on IFRS. Your queries will be responded to within 48 hours of the receipt of your mail by experts.

IASB proposes additional disclosures for investments in debt instruments

2008-12-23T13:02:00.002+05:30

The International Accounting Standards Board (IASB) today published for public comment proposals to require entities to provide additional disclosures on all investments in debt instruments, other than those classified in the fair value through profit or loss category.
The proposals, in the form of proposed amendments to IFRS 7 Financial Instruments: Disclosures, would require an entity to state in tabular form the fair value, amortised cost and amount at which the investments are actually carried in the financial statements. The amendments would also require an entity to also disclose the effect on profit or loss and equity if all debt instruments had been accounted for at fair value or at amortised cost.

Discussion Paper on Revenue Recognition by IASB and FASB

2008-12-20T11:29:00.002+05:30

The International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) today published for public comment a discussion paper setting out a joint approach for the recognition of revenue.
Revenue is an important number to users of financial statements in assessing a company’s performance and prospects. However, revenue recognition requirements in US generally accepted accounting principles (GAAP) differ from those in International Financial Reporting Standards (IFRSs) and both are considered in need of improvement. The requirements in US GAAP comprise numerous standards—many are industry‑specific and some can produce conflicting results for economically similar transactions. Although IFRSs contain fewer standards on revenue recognition, its two main standards have different principles and can be difficult to understand and apply beyond simple transactions.
The boards’ objective is to improve the existing guidance in both IFRSs and US GAAP by developing a single revenue model that can be applied consistently regardless of industry. Applying the underlying principle proposed by the boards, a company would recognise revenue when it satisfies a performance obligation by transferring goods and services to a customer as contractually agreed. That principle is similar to many existing requirements and the boards expect that many transactions would remain unaffected by the proposals. However, clarifying that principle and applying it consistently to all contracts with customers would improve the comparability and understandability of revenue for users of financial statements.
The discussion paper explains the proposed model and its implications and seeks views from interested parties to assist the boards in further developing that model into a draft standard for both IFRSs and US GAAP

Indian Companies Bill 2008 vis-a-vis IFRS

2008-11-10T19:47:00.000+05:30

COMPANIES BILL, 2008
· Explanation to clause 2(f) on “Significant Influence” requires control of at least 26% which differs from IFRS
· Clause 2(zd) defines debenture as any instrument evidencing a debt. Whether mandatorily redeemable preference shares can be termed as debt as is treated in AS 30
· Clause 2(zp) defines financial statement without stating Statement of Changes in Equity as a separate component of a complete set of financial statements
· Financial year end of all companies to be 31 March
· Clause 2(zza) gives an exhaustive definition of “Key managerial personnel”. Is this term different from “Key Management Personnel” as defined in IAS 24? IAS 24 provides an inclusive definition.
· Clause 2(zze) includes holders of preference shares as members of the company. However, as per IFRS. They are lenders and not members.
· Clause 2(zzze) defines “share” as a share in the share capital of the company. However, mandatorily redeemable preference shares do not form part of share capital as per IFRS.
· Clause 2(zzzi) provides a rule based definition to Subsidiary company which excludes special purpose entities that in substance subsidiary as per SIC 12.

IASB publishes DP on Financial Statement Presentation

2008-11-05T13:00:00.001+05:30

The IASB published for public comment discussion paper Preliminary Views on Financial Statement Presentation. The discussion paper is worth reading. The new presentation model proposed changes the look of the Statements of Financial Position, Statement of Comprehensive Income and Statement of Cash Flows. For example, instead of presenting information in Statement of Financial Position as Assets - Liabilities = Equity, it proposes to classify assets and liabilities into business, financing, income taxes and discontinued operations. It has also proposed a new reconciliation schedule. The new reconcilation schedule to be presented in the notes will reconcile cash flows to comprehensive income. This reconciliation schedule disaggregates income into its cash, accrual other than remeasurements, and remeasurement components such as fair value changes. This would increase the costs of compliance. However, it is not known whether the proposed presentation will produce more benefits that its costs. The new presentation would certainly make the analysis of figures reported in the statement of cash flows more meaningful and clear as it proposes to eliminate the indirect method of cash flow presentation. This is a welcome step as the indirect method of reconciling net profit before tax to Cash Flows from Operating Activities was difficult to comprehend. AIISAA has always favoured Direct method. Many entities are reporting the cash flow from interest income and expense equal to the amount reported in Profit and Loss Account which is rarely possible because of accrual adjustments going into it. The direct method will eliminate such misrepresentations. Also, direct method is the best suited when a consolidated cash flow is being prepared.

IASB and FASB create advisory group to review reporting issues related to credit crisis

2008-10-17T18:07:00.000+05:30

The International Accounting Standards Board (IASB) and the Financial Accounting
Standards Board (FASB) today announced that they will create a global advisory group
comprising regulators, preparers, auditors, investors and other users of financial statements.
The advisory group will help to ensure that reporting issues arising from the global economic
crisis are considered in an internationally co-ordinated manner.

Amendments to IFRS 7

2008-10-15T11:14:00.000+05:30

The International Accounting Standards Board (IASB) today published for public comment proposals to improve the information available to investors and others about fair value measurements of financial instruments and liquidity risk.
The proposals form part of the IASB’s response to the credit crisis and follow recommendations of the Financial Stability Forum, which had the support of the Group of Seven (G-7) Finance Ministers. The proposals also reflect discussions by the IASB’s Expert Advisory Panel on measuring and disclosing fair values of financial instruments when markets are no longer active

IASB amendments permit reclassification of financial instruments

2008-10-14T10:54:00.000+05:30

The International Accounting Standards Board (IASB) today issued amendments to IAS 39
Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments:
Disclosures that would permit the reclassification of some financial instruments. The
amendments to IAS 39 introduces the possibility of reclassifications for companies applying
International Financial Reporting Standards (IFRSs), which were already permitted under US
generally accepted accounting principles (GAAP) in rare circumstances.
The deterioration of the world’s financial markets that has occurred during the third quarter
of this year is a possible example of rare circumstances cited in these IFRS amendments and
therefore justifies its immediate publication. Today’s action enables companies reporting
according to IFRSs to use the reclassification amendments, if they so wish, from 1 July 2008.
These amendments are the latest in a series of steps that the IASB has undertaken to respond
to the credit crisis. The IASB has worked with a number of other regional and international
bodies, including the Financial Stability Forum (FSF), to address financial reporting issues
associated with the credit crisis. In responding to the crisis, the IASB notes the concern
expressed by EU leaders and finance ministers through the ECOFIN Council to ensure that
‘European financial institutions are not disadvantaged vis-à-vis their international
competitors in terms of accounting rules and of their interpretation.’ The amendments today
address the desire to reduce differences between IFRSs and US GAAP in a manner that
produces high quality financial information for investors across the global capital markets.

Article on Hedge Accounting

2008-10-13T11:21:00.000+05:30

We invite comment and feedback on the article on Hedge Accounting published in October 2008 issue of The CA Journal of the ICAI. Click on title and scroll down. Click on Hedge Accounting under AS 30 which is similar to IAS 39. Hence, the same principles are applicable for IFRS too.

IASB amends IAS 39

2008-10-02T11:27:00.000+05:30

The International Accounting Standards Board (IASB) issued today Eligible Hedged Items
(an amendment to IAS 39 Financial Instruments: Recognition and Measurement).
The amendment clarifies how the existing principles underlying hedge accounting should be
applied in two particular situations.
The International Financial Reporting Interpretations Committee (IFRIC)∗ asked the IASB to
provide additional guidance on what can be designated as a hedged item. The responses to an
exposure draft of proposed guidance (published in September 2007) indicated that diversity
in practice existed, or was likely to exist, in the designation of:
(a) a one-sided risk in a hedged item, and
(b) inflation in a financial hedged item.
The IASB has therefore focused on developing application guidance to illustrate how the
principles underlying hedge accounting should be applied in those situations.
Entities are required to apply the amendment retrospectively for annual periods beginning on
or after 1 July 2009, with earlier application permitted.

IASB proposes revised definition of discontinued operations

2008-09-25T15:23:00.000+05:30

IASB proposes revised definition of discontinued operations
The International Accounting Standards Board (IASB) today published for public comment
an exposure draft of proposed amendments to IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations.
The proposals are to revise the definition of discontinued operations and require additional
disclosure about components of an entity that have been disposed of or are classified as held
for sale. The proposals are the result of a joint project by the IASB and the US Financial
Accounting Standards Board (FASB) to develop a common definition of discontinued
operations and require common disclosures about them. The FASB is publishing parallel
proposals to amend its standards.
Broadly speaking, discontinued operations are operations that an entity has disposed of or
holds for sale. Entities present discontinued operations separately from continuing operations
because of the ongoing cash flows that continuing operations will generate. By adopting a
definition for discontinued operations that reflects the definition of operating segments in
IFRS 8 Operating Segments, the proposals would also increase consistency between IFRSs
and strengthen the basic principle in IFRS 5.
The proposed definition could result in fewer items being recognised in financial statements
as discontinued operations than at present. However, the additional disclosures would give
information about components of an entity that have been disposed of or are held for sale but
do not meet the definition of a discontinued operation

IASB proposes amendments to the retrospective application of IFRSs for first-time adopters

2008-09-25T15:14:00.000+05:30

IASB proposes amendments to the retrospective application
of IFRSs for first time adopters
The International Accounting Standards Board (IASB) today published for public comment
an exposure draft of proposed amendments to IFRS 1 First-time Adoption of International
Financial Reporting Standards. The proposals address the retrospective application of IFRSs
in selected areas and are aimed at ensuring that entities applying IFRSs will not face undue
cost or effort in the transition process.
The exposure draft proposes:
• to exempt companies from retrospective application of IFRSs for oil and gas assets using
the full cost method and for operations subject to rate regulation.
• to exempt companies with existing leasing contracts accounted for in accordance with
IFRIC 4 Determining whether an Arrangement contains a Lease from reassessing the
classification of those contracts according to IFRSs when the same classification has
previously been made in accordance with national GAAP.
The exposure draft Additional Exemptions for First-time Adopters (proposed amendments to
IFRS 1) is available for eIFRS subscribers from today and is freely available on the Website.
It is open for comment until 23 January 2009.

2008-08-29T18:57:00.000+05:30

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SEC Proposes Date Certain for IFRS Transition

2008-08-29T09:44:00.000+05:30

SEC Proposes Date Certain for IFRS Transition
WASHINGTON -- The Securities and Exchange Commission (SEC) voted unanimously Wednesday to allow some large American companies to begin using international accounting standards as early as next year, and to require all American companies to do so by 2016, according to the New York Times.The SEC will seek comment for 60 days on the"road map" to move from U.S. to international accounting. SEC Chairman Christopher Cox predicted U.S. regulators likely would vote again "late this year" on whether to endorse the plan, according to the Wall Street Journal.
The adoption of international accounting standards by the United States would move the world toward one set of standards, which the SEC said would make it easier for investors to compare companies operating in differing regions, and make it easier for companies to raise capital in whatever market seems most attractive, the Times reported.Under the proposal, a small group of large companies, which the S.E.C. estimated to include about 110 firms, would be allowed to use the international rules in financial statements issued after Dec. 15, meaning that it could include the 2008 annual report for companies that report on a calendar-year basis, the Times reported.To be allowed to do that, the company would have to be among the 20 largest companies in its industry around the world, and a large number of its competitors would have to already be using the international standards, according to the Times.The commission said it would consider requiring large American companies to move to the international standards for their 2014 financial statements, with smaller ones required to make the move in 2015 and the smallest - but largest number - allowed to delay until 2016. Under the plan, a final decision on those companies would be made in 2011, according to the Times.
That decision would be made by an S.E.C. whose chairman, and most of its members, would have been appointed by a new president. But by allowing some American companies to stop using American rules before that, the current commission would make it very difficult for a new chairman to try and reverse course, according to the paper.
While there is widespread agreement that one set of standards would have advantages for investors, there are concerns about the transition and about how uniform the accounts will be. American companies and auditors will have to learn new accounting rules that as yet are not taught by many American colleges, the Times reported.
The SEC's action reflects the growing push toward international accounting rules, which are in place in more than 100 countries and are mandatory for public companies in the European Union, the Journal reported. The SEC proposal would require narrowing such gaps between the U.S. and international strandards before requiring all U.S. companies to convert from U.S. to international accounting, and ensuring that U.S. accountants are familiar enough with international accounting rules.
If the road map is eventually adopted, the result will be a wholesale change in American accounting rules. While the international board and the Financial Accounting Standards Board (FASB) are working to bring convergence of the rules, there remain differences, as well as entire areas on which the international rules are silent, according to the Times.The AICPA in a statement Wednesday supported the SEC's decision and stressed that ongoing collaboration between FASB and the International Accounting Standards Board (IASB) is required to achieve convergence. The Institute also believes companies need to prepare for the shift to IFRS-based reporting using eXtensible Business Reporting Language (XBRL), a language for the electronic communication of business and financial data.The S.E.C. previously decided that, beginning this year, companies private foreign issuers who use IFRS, will no longer have to reconcile their books to U.S. GAAP, the Times reported. As a result, American investors will now have to deal with two sets of accounting rules. Another issue is the financing of the IASB, which now comes from contributions from companies and accounting firms. FASB used to be financed in the same way, but the Sarbanes-Oxley Act, passed in 2002 changed that, instead giving it the right to levy charges on public companies, according to the Times. That was viewed as necessary to assure its independence.Conrad Hewitt, the chief accountant of the S.E.C., said he was confident that within five years the international board would have secured a stable financing mechanism, the Times reported

IASB publishes proposals for amendments

2008-08-07T17:38:00.000+05:30

The International Accounting Standards Board (IASB) today published for public comment
an exposure draft of proposed amendments to eight International Financial Reporting
Standards (IFRSs) under its annual improvements project.
The proposed amendments reflect issues discussed by the IASB in the project cycle that
began last year. The proposals range from guidance added to the Appendix of IAS 18
Revenue, on how to determine whether an entity is acting as a principal or as an agent, to
changes of wording to clarify the meaning and remove unintended inconsistencies between
IFRSs.
The IASB adopted an annual process in 2006 to make necessary, but non-urgent,
amendments to IFRSs that will not be included in another project. By presenting the
proposed amendments in a single document rather than as a series of piecemeal changes the
IASB aims to ease the burden for all concerned.
Unless otherwise specified, the proposed effective date for the amendments is for annual
periods beginning on or after 1 January 2010, although entities are permitted to adopt them
earlier. The proposed effective date for those amendments arising from the revised IFRS 3
Business Combinations is 1 July 2009 (in line with the effective date for the revised standards
on business combinations—IFRS 3 and IAS 27 Consolidated and Separate Financial
Statements).
The exposure draft can be accessed via the project Website or on the ‘Open to Comment’
section on www.iasb.org. The IASB requests comments on the exposure draft by
7 November 2008.

IASB proposes amendments to simplify and achieve convergence in

2008-08-07T17:23:00.000+05:30

The International Accounting Standards Board (IASB) today published for public comment
proposals to simplify the calculation of earnings per share (EPS) and to eliminate differences
between the methods required by International Financial Reporting Standards (IFRSs) and
US accounting standards to calculate EPS. The proposals are part of the short-term
convergence project that the IASB is conducting jointly with the US Financial Accounting
Standards Board (FASB). Consequently the FASB has also published today an exposure
draft to amend SFAS 128 Earnings per Share.
In particular, the proposals aim to achieve convergence by:
􀂃 providing a clear principle to determine which shares and other instruments should be
included in the EPS calculation;
􀂃 clarifying the EPS calculation for particular instruments, such as contracts to sell or
repurchase an entity’s own shares and participating instruments; and
􀂃 simplifying the EPS calculation for instruments that are accounted for at fair value
through profit or loss.
The IASB believes that the proposals would, if implemented, simplify the calculation of EPS
and increase transparency for users of financial statements.
The IASB invites comments on the exposure draft Simplifying Earnings per Share (proposed
amendments to IAS 33) by 5 December 2008. The exposure draft is available on the ‘Open
for Comment’ section on www.iasb.org from today.

IASB amends IAS 39 for Eligible Hedged Items

2008-07-31T10:50:00.000+05:30

IPSAS News July 2008

2008-07-26T12:47:00.000+05:30

1. Outcomes of June 2008 IPSASB Meeting
Meeting Highlights from the IPSASB's most recent meeting in Moscow, Russia are now available in English, French and Spanish. At the June meeting, the IPSASB discussed the following topics:
Public Sector Conceptual Framework (see below);
Financial instruments;
Convergence of International Financial Reporting Standards (IFRSs) with the IPSASB's International Public Sector Accounting Standards (IPSASs) and the status of interpretation statements (IFRICs) from the International Financial Reporting Interpretations Committee of the International Accounting Standards Board;
Entity combinations;
Updating IPSAS 5, Borrowing Costs; and
Intangible assets.
Highlights and background papers for all past IPSASB meetings can be viewed at http://www.ifac.org/PublicSector/Meetings.php.
2. Public Sector Conceptual Framework Project Advances
At its June 2008 meeting, the IPSASB neared completion of a consultation paper on the Conceptual Framework dealing with the objectives and scope of public sector general purpose financial reporting, qualitative characteristics of financial information included in general purpose financial reports and the definition of the reporting entity. Publication of the consultation paper is planned for September 2008, with a six-month consultation period. Further information is available on the Conceptual Framework project page.
Phase 2 of the Conceptual Framework project has commenced. At its recent meeting, the IPSASB discussed some initial issues and provided direction on the definition and recognition of various elements. The IPSASB plans to review a first draft of a consultation paper on the second phase of the project at its October 2008 meeting.
3. Still Time to Comment on Service Concessions Paper
The IPSASB is seeking comments by August 1, 2008 on its consultation paper, Accounting and Financial Reporting for Service Concession Arrangements. The paper explores accounting and financial reporting issues related to service concession arrangements from the perspective of the grantor (typically a public sector entity). It provides proposals for the IPSASB to consider in developing any authoritative international public sector requirements for accounting and reporting on these arrangements. Comments may be emailed to edcomments@ifac.org.
4. Outreach Initiatives
The IPSASB continues its strong program of outreach to constituents. IPSASB Chair Mike Hathorn has participated or is scheduled to participate in the following events:
Meeting of the International Federation of Accountants Developing Nations Committee on July 15-16;
Liaison meeting with the International Accounting Standard Board on July 21, 2008; and
Joint meeting of the New Zealand and Australian Accounting Standards Boards on July 31, 2008.In addition, Stephenie Fox, IPSASB Technical Director, is making a presentation on IPSASs to the Konferensi Sektor Publik in Jakarta, Indonesia on July 23-24. Further information is available at http://www.iaiglobal.or.id

PAIB Committee News July 2008

2008-07-26T12:43:00.000+05:30

1. Proposed Guidance Addresses Evaluating and Improving Governance
The PAIB Committee is seeking comments on its proposed guidance entitled Evaluating and Improving Governance in Organizations. With the purpose of striking a balance between organizational performance and conforming with rules and regulations, the exposure draft sets out a framework, principles, guidelines, and references for evaluating and improving an organization's governance.
Comments are requested by September 23, 2008, and may be submitted via edcomments@ifac.org, or, as part of a pilot project, comments are encouraged via an online feedback form at http://www.ifac.org/governanceed. The guidance may be viewed at http://www.ifac.org/eds.
2. IFAC Initiates New Project on Business Reporting
The PAIB Committee has embarked on a follow-up project on financial reporting that will compare the issues and recommendations of its recently published report, Financial Reporting Supply Chain: Current Perspectives and Directions, with the developments that are taking place in countries around the world.
The results of this new survey will help IFAC improve the quality of financial reporting by delivering specific proposals that will address the primary finding of the initial report: that much work remains to meet the needs of investors and other financial reporting supply chain participants. A second part of the project will involve the development of an interview series centered on the elements and practices that constitute good business reports. For more information on the business-reporting project, please visit http://www.ifac.org/frsc.
3. PAIB Committee Invites Comments on Proposed Costing Guidance
The committee is also seeking comments on a second exposure draft, Costing to Drive Organizational Performance, which is intended to help professional accountants provide useful cost information to support decision making in organizations.
Comments are requested by September 23, 2008, and may be submitted by e-mail to edcomments@ifac.org. The exposure draft is accessible via http://www.ifac.org/eds.
4. PAIB Committee Releases New Guidance on Evaluating Investments
The PAIB Committee released new guidance on the use of discounted cash flow analysis and net present value in evaluating investments. Entitled Project Appraisal Using Discounted Cash Flow, this guidance is part of the committee's new program to develop International Good Practice Guidance on financial and management accounting topics.
The committee also released the new Preface to IFAC's International Good Practice Guidance, which details the scope, purpose and due process of the project.
These documents are accessible at IFAC's online bookstore. Feedback on the documents is welcome and should be emailed to stathisgould@ifac.org.
5. New Paper Focuses on Accountants' Roles in Mid-Sized Enterprises
In May 2008, the PAIB Committee released The Crucial Roles of Professional Accountants in Business in Mid-Sized Enterprises. Featuring interviews with 10 senior-level professional accountants in business on their experiences in mid-sized enterprises, this paper illustrates the critical roles that professional accountants play in identifying and addressing unique challenges that mid-sized enterprises face. The paper may be downloaded from the IFAC online bookstore.
6. IFAC Enhances International Center for PAIBs
Visit the International Center for PAIBs to take advantage of its recently enhanced functionality and value. Through the new Relevant Links page, registered users may now add and share links to documents, websites and other resources of interest. Users may also sort the links by topic, name or posting date. This free resource is available directly at http://www.ifac.org/paib/relevant_links.php or through the International Center's homepage, http://www.ifac.org/paib/.
7. IFACnet Increases Functionality of Its Search Results Page
Professional accountants in business and other accountancy professionals may now access information and resources more easily via IFACnet, the global, multilingual search engine supported by IFAC and more than 30 member bodies and other organizations worldwide. The enhancements to the search results page now allow users to refine searches, provide feedback and share links through the redesigned page. IFACnet may be accessed on its home page at http://www.ifacnet.com as well as on the websites of participating organizations and the International Center for PAIBs on http://www.ifac.org.
8. Next PAIB Committee Meeting
Planned for October 6-8, 2008, the next meeting of the PAIB Committee is set to take place in New York City. IFAC will provide further information in the coming months. Highlights of previous committee meetings are viewable from its home page, http://www.ifac.org/paib/committee.php.
For more information about any of the items mentioned above or about the PAIB Committee, please contact pr@ifac.org, or visit the PAIB home page at http://www.ifac.org/paib

Expert Advisory Panel on Financial Instruments

2008-07-25T20:09:00.002+05:30

Expert Advisory Panel
24 July 2008
At its May 2008 meeting, the IASB announced its plans to form an expert advisory panel in response to the recommendations made by the Financial Stability Forum.
Meeting summaries (by date)
17 July 2008
7 July 2008
13 June 2008
Objective
The panel will assist the IASB in:
reviewing best practices in the area of valuation techniques, and
formulating any necessary additional guidance on valuation methods for financial instruments and related disclosures when markets are no longer active.
The discussions of the panel members will give the Board insight into whether there is a need for additional guidance that might be necessary in this area and the form of any such guidance.
The discussions of the panel will provide input for the IASB’s work on financial instruments and fair value measurement . The panel’s views will be discussed with other interested parties before any guidance is issued.
The remit of the panel is how to measure the fair value of financial instruments when markets are no longer active. The panel will not discuss whether fair value is an appropriate measurement basis for a particular financial instrument or class of financial instruments.
The IASB is addressing this in its work on financial instruments and has published a discussion paper Reducing Complexity in Reporting Financial Instruments , inviting respondents to comment by 19 September 2008.
Membership
The expert advisory panel comprises experts from preparers and users of financial statements, as well as regulators and auditors.
Participants have been selected based on their practical experience with the valuation of financial instruments in the current market environment.
Representatives from the following organisations are participating in the panel:
A. C. Sondhi & Associates, LLC
AIG (American International Group)
Basel Committee on Banking Supervision
BNP Paribas
Capital International Research Inc.
Citigroup
Deloitte
Deutsche Bank
Ernst & Young
Financial Stability Forum
Fitch Ratings
Goldman Sachs
HSBC
International Association of Insurance Supervisors
International Organization of Securities Commissions (IOSCO)
Professor Ravi Jagannathan, Northwestern University Kellogg School of Management
KPMG
Mizuho Financial Group, Inc.
Pioneer Investments
PricewaterhouseCoopers
Swiss Re
UBS
Financial Accounting Standards Board (staff observer)
Meeting summaries
17 July 2008 meeting
On 17 July 2008 the sub-group of the panel met again to discuss specific examples to illustrate the measurement issues identified at the 13th June meeting and discussed at the 7 July meeting. Nine examples were presented covering the following issues:
measuring fair value when there are no longer observable market prices
using transaction prices when the number of actual transactions has decreased
using data from pricing services, brokers or other sources
selecting inputs to models and adjusting those inputs
dealing with forced transactions (forced liquidation or distressed sales)
measuring changes in non-performance risk (own credit)
The examples related to the following instruments and structures:
commercial paper and auction rate securities
asset backed securities
loans in syndication
real estate loans
structured derivatives
The panel members discussed the approaches to these issues and transactions that have been developed over the past several months. These examples will form the basis of a draft document that will be presented to the full panel at its next meeting on 31 July 2008.
7 July 2008 meeting
On 7 July 2008 a sub-group of the panel met to discuss in greater detail the measurement of financial instruments in markets that are no longer active.
The sub-group comprises the preparers and auditors on the panel. The objective of the meeting was to review the practical issues encountered, as identified in the 13th June meeting, and discuss the resolutions that have been found in practice over the past several months.
13 June 2008 meeting
The expert advisory panel met for the first time on 13th June 2008 in London to identify specific valuation and disclosure issues encountered in practice in the current market environment.
The issues relating to measurement included:
Selection of a valuation technique : The panel discussed how to select an appropriate valuation technique, and when that valuation technique might or should be changed.
Calibration of valuation model : The panel discussed when and how a valuation model should be calibrated to actual transactions when applying a particular valuation technique.
Use of third-party price quotes : The panel discussed the use of, and reliance upon, price quotes by third-parties (for example, brokers or pricing services) when transactions have occurred and when quotes were indicative and no transactions were occurring, and what to do when those indicative quotes differ from the value derived from a model.
Adjustments to valuation models : The panel discussed the types of adjustments that should be made to the model to reflect the value of the instrument being valued, and how such adjustments might be determined. For example, the panel discussed whether and how adjustments to reflect liquidity should be made.
Meaning of ‘observable’ and ‘significant’ inputs : The panel discussed what ‘observable’ and ‘significant’ meant in the context of inputs to a valuation model. This is important to determine the level in the fair value hierarchy (Level 1, Level 2 or Level 3) of the fair value hierarchy in FASB Statement of Financial Accounting Standards No. 157 Fair Value Measurements (SFAS 157).
Distinguishing between active and inactive markets : The panel discussed how to distinguish between an active market and an inactive market, and the importance of being able to determine when fair value might be based on something other than an observed transaction price.
Forced transactions (forced liquidations and distressed sales) : The panel discussed whether observed market prices could ever clearly identify forced or distressed sales and, if so, the implications of using such prices.
Measurement of changes in own credit : The panel discussed how to measure changes in own credit
The issues relating to fair value disclosures included:
Disclosures using the fair value hierarchy : The panel noted that banks outside the US have begun using the fair value hierarchy terminology in SFAS 157, that is ‘Level 1,’ ‘Level 2’ and ‘Level 3’, when discussing disclosures and inputs to valuation techniques. The panel discussed whether any relationships between instruments in different levels of the hierarchy should be disclosed.
Disclosures of valuation techniques, inputs, sensitivities and ranges : The panel discussed whether disclosures might be improved if the material data inputs used, and the valuation sensitivities of those inputs, were disclosed. The panel also discussed whether sensitivities would be more meaningful if they are presented in the aggregate (eg under an ‘adverse outcome’ scenario) rather than at an individual input level (eg changing one input at a time, holding all others constant).
What are the next steps?
We’ve learned through the panel meetings to-date that the requirements and guidance in IAS 39 with regard to fair value measurement generally are clear, and that there is much consistency in the approach, or thought process, used to arrive at a fair value measure.
However, there is an education aspect regarding possible approaches to use that we need to consider, especially for smaller financial institutions and corporates.The next full expert advisory panel meeting is on 31 July. At that meeting we plan to discuss a draft document that will contain:
a summary of the issues encountered in the credit crisis;
IAS 39’s requirements and guidance with regard to those issues; and
a summary of how the panellists have dealt with the issues in practice, which will focus on the processes and approaches used when measuring the fair value of financial instruments when there is no longer an active market.
After that meeting, we will post a draft on this Website for interested parties to provide feedback. Due to the urgency of completing this work in a timely manner, we will ask interested parties to provide comments to us fairly quickly.
After addressing the measurement of financial instruments in markets that have become inactive, the panel will address disclosures. In August 2008 a sub-group of the panel will meet to discuss how disclosures could be improved to provide transparency about fair value measurements in the current market environment. The sub-group for disclosures will comprise preparers, auditors and users. Some of the preparers will prepare pro-forma disclosures combining the fair value disclosures in IFRS 7 Financial Instruments: Disclosures and SFAS 157. These pro-forma disclosures will highlight where the requirements overlap, where there are gaps and whether the combined information provides meaningful information for users. These disclosures will be presented to the larger panel at a meeting in September.
To ensure that the panel is able to discuss freely the practical issues that have arisen in the credit crisis, these meetings will be held in private sessions. However, a summary of the discussions of the panel, including those in the sub-group meetings, will be presented to the IASB in a public meeting and will be published on this Website.

IASB concludes first annual improvements project

2008-05-27T18:09:00.002+05:30

The International Accounting Standards Board (IASB) issued today Improvements to IFRSs — a collection of amendments to International Financial Reporting Standards (IFRSs). These amendments are the result of conclusions the Board reached on proposals made in its annual improvements project.
The IASB decided to initiate an annual improvements project in 2007 as a method of making necessary, but non-urgent, amendments to IFRSs that will not be included as part of another major project. The IASB’s objective was to ease the burden for all concerned by presenting the amendments in a single document rather than as a series of piecemeal changes. The amendments issued today are presented in two parts:
• those that involve accounting changes for presentation, recognition or measurement purposes a list of standards affected by these amendments and the issues addressed
is included in the notes following), and
• those involving terminology or editorial changes with minimal effect on accounting.
Unless otherwise specified the amendments are effective for annual periods beginning on or after 1 January 2009, although entities are permitted to adopt them earlier.
During its deliberations of comments received on the exposure draft of proposals published in October 2007, the IASB decided to postpone reconsideration of some of the proposals until more analysis could be completed. The Board also decided to issue separately the amendment to restructure IFRS 1 First-time Adoption of International Financial Reporting Standards. The amendments issued today do not include those proposals.

In 2007 the IASB adopted an annual process to deal with non-urgent amendments to IFRSs
arising from matters raised by the International Financial Reporting Interpretations
Committee (IFRIC) and suggestions from staff or practitioners. The improvements focus on
areas of inconsistency in IFRSs or where clarification of wording is required. Each year the
IASB discusses and decides on proposed improvements to IFRSs as they arise throughout the
year. In the third or fourth quarter of the year, an omnibus exposure draft of the collected
proposals is published for public comment, with a comment period of 90 days. After the
IASB has considered the comments received, it aims to issue the amendments in final form in
the following second quarter, with an effective date of 1 January of the following year.
IFRSs addressed
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
Plan to sell the controlling interest in a subsidiary
IAS 1 Presentation of Financial Statements
Current/non-current classification of derivatives
IAS 16 Property, Plant and Equipment Recoverable amount
Sale of assets held for rental
IAS 19 Employee Benefits Curtailments and negative past service cost
Plan administration costs
Replacement of term ‘fall due’
Guidance on contingent liabilities
IAS 20 Accounting for Government Grants and Disclosure of Government Assistance
Government loans with a below-market rate of interest
IAS 23 Borrowing Costs
Components of borrowing costs
IAS 27 Consolidated and Separate Financial Statements
Measurement of subsidiary held for sale in separate financial statements
IAS 28 Investments in Associates
Required disclosures when investments in associates are accounted for at fair value through profit or loss
Impairment of investment in associate
IAS 31 Interests in Joint Ventures
Required disclosures when interests in jointly controlled entities are accounted for at fair value through profit or loss
IAS 29 Financial Reporting in Hyperinflationary Economies
Description of measurement basis in financial statements
IAS 36 Impairment of Assets
Disclosure of estimates used to determine recoverable amount
IAS 38 Intangible Assets
Advertising and promotional activities
Units of production method of amortisation
IAS 39 Financial Instruments:Recognition and Measurement
Reclassification of derivatives into or out of the classification of at fair value through profit or loss
Designating and documenting hedges at the segment level
Applicable effective interest rate on cessation of fair value hedge accounting
IAS 40 Investment Property
Property under construction or development for future use as investment property
IAS 41 Agriculture
Discount rate for fair value calculations
Additional biological transformation

IFAC Releases Guide to Applying ISAs to Small Entity Audits

2008-02-22T16:46:00.000+05:30

IFAC has released a new implementation guide to assist practitioners, and in particular small and medium practices, in applying ISAs to the audit of SMEs. The publication, Guide to Using ISAs in the Audit of Small- and Medium-sized Entities, provides a detailed analysis of all ISAs issued as of December 31, 2006 and their requirements in the context of an SME audit. The guide is available free-of-charge from the IFAC bookstore (http://www.ifac.org/store).

IAASB Issues Amendments to Review Engagement Standards

2008-02-22T16:45:00.000+05:30

The IAASB has agreed to amend two International Standards on Review Engagements (ISREs) to clarify which standard should be applied to a specific engagement and to ensure that there is no overlap in the scopes of the standards and ISAE 3000. The amendments to ISRE 2400, Engagements to Review Financial Statements, and ISRE 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity, are effective immediately. They can be downloaded from the IFAC bookstore (http://www.ifac.org/store).

New Requirements for Audits of Group Financial Statements Issued

2008-02-22T16:44:00.000+05:30

To enhance the quality of audits of group financial statements, in October 2007 the IAASB released ISA 600 (Revised and Redrafted), Special Considerations - The Audit of Group Financial Statement (Including the Work of Component Auditors). The standard assists the group engagement partner in taking responsibility for the direction, supervision and performance of the group audit and the issue of an auditor's report that is appropriate in the circumstances. ISA 600 is effective for audits of financial periods commencing on or after December 15, 2009.

Three More Clarified ISAs Issued

2008-02-22T16:43:00.000+05:30

In December 2007, the IAASB released the following final standards redrafted in the clarity style:
• ISA 230 (Redrafted), Audit Documentation;
• ISA 260 (Revised and Redrafted), Communication with Those Charged with Governance; and
• ISA 720 (Redrafted), The Auditor's Responsibility in Relation to Other Information in Documents Containing Audited Financial Statements.
Further information on the standards is available in the press release. The standards can be downloaded free-of-charge from the International Federation of Accountants (IFAC) online bookstore.

IAASB Proposes New Standards on Service Organizations

2008-02-22T16:41:00.000+05:30

The IAASB is also inviting comments on two proposed standards that cover third party service organizations. Proposed ISA 402 (Revised and Redrafted), Audit Considerations Relating to an Entity Using a Third Party Service Organization, deals with the auditor's responsibilities to obtain audit evidence when an entity uses one or more service organizations. Comments are requested by April 30, 2008.
Proposed International Standard on Assurance Engagements (ISAE) 3402, Assurance Reports on Controls at a Third Party Service Organization, complements the requirements in proposed ISA 402. Reports prepared in accordance with proposed ISAE 3402 will be capable of providing appropriate audit evidence under proposed ISA 402. Comments on proposed ISAE 3402 are requested by May 31, 2008.

Proposed ISA Addresses Communicating Deficiencies in Internal Control

2008-02-22T16:39:00.000+05:30

The IAASB is seeking comments by April 30, 2008 on proposed ISA 265, Communicating Deficiencies in Internal Control, which addresses the auditor's responsibility to communicate to management and those charged with governance deficiencies in internal control that the auditor has identified. The proposed standard distinguishes between significant and other deficiencies in order to establish requirements to communicate to the appropriate levels within the audited entity. It also requires that significant deficiencies be communicated in writing to those charged with governance. Comments can be emailed to EDComments@ifac.org.

New Standard Focuses on Accounting Estimates and Fair Values

2008-02-22T16:37:00.000+05:30

In February, the IAASB released new requirements on auditing accounting estimates, including fair value accounting estimates. The new standard, ISA 540 (Revised and Redrafted), Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures, addresses matters such as the auditor's evaluation of the effect of estimation uncertainty on risk assessments, management's methods for making estimates, the reasonableness of assumptions used by management, and the adequacy of disclosures. It is effective for audits of financial periods commencing on or after December 15, 2009.
In addition, the IAASB has established a task force to consider how best to approach the development of possible further fair value auditing guidance.

IAASB Completes First Phase of Clarity Project

2008-02-22T16:36:00.000+05:30

The IAASB has now completed the first phase of its project to redraft its international standards to enhance their clarity and to promote adoption and implementation. In December 2007, it approved the last exposure drafts of proposed International Standards on Auditing (ISAs) redrafted following the clarity conventions. Comments are requested by March 31, 2008 on proposed ISA 501 (Redrafted), Audit Evidence Regarding Specific Financial Statement Account Balances and Disclosures, and proposed ISA 520 (Redrafted), Analytical Procedures. The exposure drafts can be viewed at http://www.ifac.org/eds.
The IAASB is on track to complete the redrafting of all ISAs as final standards by the end of 2008.

Distributions of Non-Cash Assets to Owners

2008-02-16T13:01:00.001+05:30

The International Financial Reporting Interpretations Committee (IFRIC) today released for public comment a draft Interpretation, D23 Distributions of Non-cash Assets to Owners.

The IFRIC was asked to provide guidance on how an entity should measure distributions of assets other than cash when it pays dividends to its owners acting in their capacity as owners. At present, International Financial Reporting Standards do not address the measurement of distributions to owners.

The proposed Interpretation addresses the following two issues:

(a) How should an entity measure an obligation to distribute non-cash assets to its owners (a dividend payable)?

(b) When an entity settles the dividend payable, how should it account for any difference between the carrying amount of the assets distributed and the carrying amount of the dividend payable?

IFRIC D23 would apply to all types of distributions of non-cash assets with one exception. It would not apply to a distribution of an asset to another entity within the same consolidated group.

IFRIC D23 proposes that all types of distributions of non-cash assets would be measured at the fair value of the assets distributed. The IFRIC proposes that the guidance should be applied only to future distributions because it recognises the difficulty entities would face in recognising past distributions at their fair values.

Convergence of US GAAP with IFRS 3 and IAS 27

2008-02-16T12:38:00.004+05:30

The International Accounting Standards Board (IASB) has completed the second phase of its business combinations project by issuing today a revised version of IFRS 3 Business Combinations and an amended version of IAS 27 Consolidated and Separate Financial Statements. The new requirements take effect on 1 July 2009, although entities are permitted to adopt them earlier.

The project was undertaken jointly with the US Financial Accounting Standards Board (FASB). The objective was to develop a single high quality accounting standard that would ensure that the accounting for business combinations is the same whether an entity is applying International Financial Reporting Standards (IFRSs) or US generally accepted accounting principles (GAAP).

Business combinations are an important feature of the capital markets. Over the past decade the average annual value of corporate acquisitions worldwide has been the equivalent of 8‑10 per cent of the total market capitalisation of listed securities.

In publishing its equivalents to IFRS 3 and IAS 27, the FASB has made fundamental changes to its accounting for business combinations, most of which bring US accounting into line with the existing IFRS 3 and IAS 27. Other improvements will change both IFRSs and US GAAP. The revised IFRS 3 reinforces the existing IFRS 3 model but remedies problems that have emerged in its application

Proposed Amendments to IAS 1 and IAS 27

2008-02-16T11:07:00.001+05:30

Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate contains proposed amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards and IAS 27 Consolidated and Separate Financial Statements.
Amendments to IFRS 1
· a proposal to allow entities, in their separate financial statements, to use a deemed cost option for determining the cost (in accordance with paragraph 37 of IAS 27) of an investment;
· the use of either fair value (determined in accordance with IAS 39 Financial
Instruments: Recognition and Measurement) or the carrying amount at that deemed
cost under previous national standards; and
· a change in scope of the applicability of the deemed cost option to include jointly
controlled entities and associates as well as subsidiaries.
Amendments to IAS 27
· the removal of the ‘cost method’ from paragraph 4 of IAS 27; and
· a proposal to require a new parent to measure cost using the carrying amounts of the existing entity at the date when the new parent is formed.

Amendments to IAS 32 - Puttable Instruments

2008-02-14T16:33:00.001+05:30

In February 2008 we issued Amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements - Puttable Financial Instruments and Obligations Arising on Liquidation. The new requirements come into effect on 1 January 2009, early application is permitted.

The amendments classify the following types of financial instruments as equity, provided they have particular features and meet specific conditions:

puttable financial instruments (for example, some shares issued by co-operative entities)
instruments, or components of instruments, that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation (for example, some partnership interests and some shares issued by limited life entities)

Under the amendments, the following types of financial instruments would be classified as equity, provided that specified criteria are met:

ordinary shares that are puttable to (ie redeemable from) the issuer at fair value;
ordinary shares of limited life entities; and
partners’ interests in a partnership that must liquidate upon exit of a partner (eg on retirement or death).
The amendments also propose disclosures about the instruments affected by the proposals.

Vacancy: IFRS Project manager

2008-02-08T11:52:00.001+05:30

The International Accounting Standards Board (IASB) is the private sector independent body responsible for developing a single set of high quality global accounting standards for use throughout the world. More than 100 countries use international financial reporting standards (IFRSs). Staff at the IASB come from more than 25 countries.

The IASB is increasing its technical staff team and wishes to appoint project managers at all levels of experience. While many applicants will have knowledge of IFRSs and/or US GAAP, we also welcome applicants with other relevant experience. Our staff includes people with banking, valuation and actuarial expertise as well as those with an accounting background.

We are looking for people with expertise in securitization, pensions and employee benefits, as well as those with general accounting knowledge.

You need a minimum of 3 years experience for an assistant project manager position, 6 years experience to be a project manager, and 10+ years, including experience of accounting standard setting, to be a senior project manager.

Reporting to the Director of Technical Activities and the Director of Research, project managers play a pivotal role in the development of IFRSs.

Project managers:

research challenging areas of accounting.
develop proposals for IASB members to consider.
present recommendations at public IASB meetings.
manage advisory groups of experts from the accounting, business, investment and regulatory communities.
consult external organisations.
liaise directly with other standard-setting bodies.
Successful applicants will be capable of working closely with the IASB’s members and technical staff. IASB project managers must be capable of leading debates at Board level, handling relationships with external organisations, writing for publication and supervising other staff. The working language at the IASB is English.

What next?
To indicate interest, please send a covering letter and CV by 15 February 2008 to:

Ana Nobre
HR Administrator
IASC Foundation
30 Cannon Street
London EC4M 6XH
United Kingdom
Alternatively, email Ana Nobre: anobre@iasb.org

Disclosures where national standards are adapted or modified from IFRS

2008-02-08T11:11:00.000+05:30

Companies preparing annual and interim financial statements on the basis of national standards that are
modified or adapted from IFRS should include at least the following statements:
1. A clear and unambiguous statement of the reporting framework on which the
accounting policies are based;
2. A clear statement of the company's accounting policies on all material accounting
areas;
3. An explanation of where the accounting standards that underpin the policies can be
found;
4. A statement that explains that the financial statements are in compliance with IFRS as
issued by the IASB, if this is the case; and
5. A statement that explains in what regard the standards and the reporting framework
used differs from IFRS as issued by the IASB, if this is the case.

IOSCO urges clear disclosure of accounting framework

2008-02-08T11:05:00.000+05:30

The International Organization of Securities Commissions (IOSCO) – the consortium of the world's securities regulators – has published a statement urging publicly traded companies to provide investors with clear and accurate information on the accounting standards used to prepare their accounts. In particular, IOSCO is concerned that, with the convergence of global accounting standards, investors may assume that all company accounts are generally comparable, even when they are prepared in accordance with quite different GAAPs. This commonly occurs where national standards assert that they are based on but do not fully implement International Financial Reporting Standards (IFRS). This could occur, for instance, if a jurisdiction:

adopts some but not all IFRSs as its national GAAP,
modifies an IFRS when adopting it,
delays adoption of a new or amended IFRS including Interpretations, or
changes the effective date or method of transition.

Transaltion of International Standards

2008-01-29T10:51:00.000+05:30

IFAC has launched a database of third-party translations of its international standards, including International Education Standards. The database features information on the languages available, publication titles, names of translating organizations and, where available, lists of translated key terms. In addition, IFAC has released two new policy statements to facilitate the translation and reproduction of its publications. For more information, visit: http://www.ifac.org/translations.

IAESB adopts new strategic plan

2008-01-29T10:48:00.000+05:30

The IAESB has released its Strategic and Operational Plan, which sets out its strategy and work plan for the three-year period 2007-2009. The IAESB's activities during this period will focus on conducting a fundamental review of the Education Framework, developing guidance to support the measurable implementation of International Education Standards, and reviewing existing standards to determine where the clarity of the standards could be improved. A Basis for Conclusions was issued with the plan.

IT knowledge Requirements

2008-01-29T10:46:00.000+05:30

In October 2007, the IAESB released IEPS 2, Information Technology for Professional Accountants, which outlines the knowledge and skills necessary to prepare professional accountants to perform competently in the IT environment. IEPS 2 identifies the competency elements that IFAC member bodies can include in the IT knowledge component of prequalification professional accounting education programs. It also provides guidance on teaching and assessing IT at the prequalification stage, as well as implementing post-qualification development of IT knowledge and competences.

Guidance on Practical Experience

2008-01-29T10:45:00.000+05:30

To assist member bodies of the International Federation of Accountants (IFAC), accounting educators and others in developing high quality practical experience programs for prospective members of the profession, the IAESB has released a new IEPS 3, Practical Experience Requirements - Initial Professional Development for Professional Accountants. The practice statement provides guidance on the period of practical experience, the content of practical experience requirements, and the roles and responsibilities of IFAC members as well as mentors and employers. It can be downloaded free-of-charge from the IFAC online bookstore.

Tools to Promote Ethics Education

2008-01-29T10:41:00.000+05:30

In recent months, the IAESB has released two new tools to assist professional accountancy organizations and educators in developing high quality ethics education training programs for professional accountants and accounting students. The first is International Education Practice Statement (IEPS) 1, Approaches to Developing and Maintaining Professional Values, Ethics, and Attitudes, which provides guidance on approaches to the development of professional values, ethics, and attitudes. It also discusses methods for delivering ethics education, stressing the importance of workplace learning and assessment. The second is the Ethics Education Toolkit, which features a range of case studies and supporting notes, presentations, video clips, and other teaching materials. Both items can be downloaded free-of-charge at http://www.ifac.org/store.
Further information on the development of IEPS 1 is available in Basis for Conclusions, which is released along with each final standard and guidance document. The Basis for Conclusions for each IEPS can be viewed on the IAESB project page.

Accounting Education Research Proposals

2008-01-29T10:39:00.000+05:30

The International Association for Accounting Education and Research, with the support of the Association of Chartered Certified Accountants (ACCA), has issued a call for proposals to conduct research to support the work of the IAESB and to assist IFAC's members and associates in enhancing accounting education programs. Research that promotes a better understanding of the current state of accounting education worldwide and the implementation of the IAESB's International Education Standards is also welcomed. All proposals must be submitted by March 31, 2008. For more information, including a list of possible research topics, see the ACCA website.

Input sought on Accounting Education Framework

2008-01-29T10:37:00.000+05:30

The IAESB is seeking responses from all those with an interest in accounting education to a survey on the audience, scope and nature of its International Education Standards. The IAESB is conducting this survey as part of a fundamental review of the Framework for International Education Statements, which establishes the context in which IAESB pronouncements are set and the principles determining the approach to be taken. The survey takes no more than 30 minutes to complete and can be accessed online at http://www.ifac.org/educationsurvey. Your response is requested by March 1, 2008.

Investment in Foreign currency by way of Demand Promissory Note

2008-01-25T16:00:00.000+05:30

The issue is whether the investment in USD made by an indian company whose functional currency is INR by way of demand promissory note should be restated at its year end rate?

As per AS 11 and IAS 21, the investment falls in the category of monetary items and hence the value of the investment should be restated at the year-end exchange rate.

Full-Time IASB Member

2008-01-25T15:56:00.000+05:30

Full-time IASB member

The Trustees of the IASC Foundation invite applications for one full-time IASB member.

The qualifications of candidates will be considered on the basis of the criteria listed in the Annex of the IASC Foundation’s Constitution.

The main qualifications for membership of the IASB are professional competence and practical experience. The Trustees select members so that the IASB will comprise a group of people representing, within that group, the best available combination of technical expertise and diversity of international business and market experience in order to contribute to the development of high quality, global accounting standards.

In making this appointment, the Trustees will give special consideration to candidates who have:

experience as preparers of IFRS accounts and to
investment professionals with good knowledge of IFRSs.
Qualities expected in candidates will be complete integrity, commitment to the IASB’s mission, the IASB’s conceptual framework and the public interest, and a willingness to handle a demanding and diverse workload.

Successful new applicants will be expected to live in London, where the IASB is located. The term of the successful candidate will end on 30 June 2011.

Mandatory Online Tax Payment

2008-01-25T11:31:00.000+05:30

No.402/92/2006- MC (05 of 2008)
Government of India / Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi dated the 23rd January 2008
PRESS RELEASE
The optional scheme of electronic payment of taxes for income-tax payers was introduced in 2004. With a view to expand the scope of electronic payment of taxes, it is proposed to make the scheme mandatory for the following categories of tax-payers:-

1. All corporate assesses;

2. All assesses (other than company) to whom provisions of section 44AB of the Income Tax Act are applicable

3. The scheme of mandatory electronic payment of taxes for income-tax payers is proposed to be made applicable from 1st April, 2008.

4. Tax-payers can make electronic payment of taxes through the internet banking facility offered by the authorized banks. They will also be provided with an option to make electronic payment of taxes through internet by way of credit or debit cards.

Accounting for a watchdog

2008-01-19T18:58:00.000+05:30

Today i got an issue how to account for a watchdog which was kept specifically for protection of the property and other assets?

The issues are the expense incurred on purchase of watchdog, its maintenance and the changes in value to be made due to its growth and if the dog is of feminine gender the changes in value due to procreation.

The guidance given is based on IFRSs. The watchdog can be viewed as one of the non-cureent tangible assets just like other assets purchased and installed for security puposes like fire alarm, smoke alarm, CCTV camera etc. The expenses on Purchase should be capitalised. All directly attributable expenses like transport costs should also be capitalised under the line item "Biological assets". At the year-end,the value of the watchdog should be restated to reflect fair value with the changes in fair value being posted to Income Statement. The exception of not applying fair value accounting would be in such case not apply. The expenses on maintenance should be charged as administrative expenses. The effect of procreation should be disclosed separately reflecting the changes in fair value due to such phenomenon.

PAN is now mandatory for transacting in Mutual Funds in India

2008-01-18T20:10:00.000+05:30

This is to update you on the requirements of Prevention of Money Laundering Act, 2002and the subsequent notifications dated 27 April, 2007 and 25 June, 2007 issued by SEBI which made Permanent Account Number (PAN) as the sole identification number for all participants transacting in the securities market (which includes Mutual Funds) with effect from 2 July, 2007.
To ensure compliance with the requirements mandated by SEBI, it is now mandatory for all investors (including NRIs) to submit a copy of the PAN card while making a new / additional purchase transactions (including SIPs) of any amount. In absence of the above, such transactions will be liable for rejection by the mutual fund with effect from Jan 01, 2008.

Applicability of the new guidelines:
• Only PAN card copy is accepted as PAN proof, effective January 1, 2008. No document would be accepted in lieu of the PAN. Thus form 49A / 60 or evidence of PAN other than a PAN card will not be accepted..

• Submission of PAN card copy is mandatory for all existing as well as prospective investors (including joint applicants / holders, guardians and NRIs) for investing with Mutual Funds from January 1, 2008..

• Existing investors who had earlier provided Form 49A or copy of application for issue of duplicate PAN card must submit a copy of their PAN card to us immediately, to continue transacting with us.

Verification of PAN Proof:
• Investors are required to submit a copy of their PAN card. Please note that the PAN copy needs to be attested by any of the following :-.
a. At the Mutual Fund office (verification with original to be done by the
person accepting the documents)
b. Your Financial Advisor
c. Your Bank Manager
d. Gazetted Officer
e. Notarized Copy
f. Judicial Authority

• As mandated by the regulation, PAN details need to be verified from the Income Tax database by our Registrars.

• Where PAN proof is available, verification will be carried out from the Income Tax Database.

• Incase of mismatch between the details provided and Income Tax database, Investors will be notified about the difference and the investor's folio would be locked for additional purchases and future SIP registrations.

Recission ofanti-dumping duty

2008-01-18T19:58:00.000+05:30

Anti-dumping duty on Para Hydroxy Phenyl Glycine Base (PHPG Base)originating in and / or exported from People's Republic of china has been withdrawn and therefore the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 122/2002-Customs, dated the 31st October, 2002, published in the Gazette of India vide number G.S.R.746 (E), dated the 31st October, 2002,has been rescinded except as respects things done or omitted to be done before such rescission

12 new services to be added in tax net

2008-01-18T19:48:00.000+05:30

About a dozen new services are likely to be brought under the service tax net from fiscal 2008-09, even as the rate could be increased from 12 per cent. Last year, the government had considered raising the rate to 14 per cent but the move was shelved on account of fears of inflation, which was ruling at 6.5 per cent in January 2007.

Incentive to Indian Income Tax Departments

2008-01-18T19:45:00.001+05:30

The Finance Minister, Mr P. Chidambaram, has sanctioned an incentive of Rs 195 crore to the Income Tax Department towards the additional direct tax revenues mobilised in fiscal 2006-07. Official sources said that the one per cent incentive, amounting to Rs 195 crore, would be utilised for improving infrastructure within the department and also enhancing operational efficiency.

Pilgrim's in India may get tax-free lodging

2008-01-18T19:28:00.000+05:30

The Budget may have a special package for pilgrims. The finance ministry has in-principle agreed to extend a five-year tax holiday to budget hotels on the Buddhist circuit. Prime Minister’s infrastructure committee has, however, suggested to the finmin broadening its scope to include all heritage and pilgrim destinations.

CPE Credit Requirements for Members of ICAI

2008-01-18T13:56:00.000+05:30

The CPE Credit Requirements for the rolling period of three years starting from the calendar year 2008 as given below:
CPE Credit Requirements for members of the Institute of the Chartered Accountants of India
All the members who are holding Certificate of Practice (except those members who are residing abroad), unless exempted, are required to:
Complete at least 90 CPE credit hours in each rolling three-year period of which 60 CPE credit hours should be of structured learning.
Complete minimum 20 CPE credit hours of structured learning in each year.
All the members who are not holding Certificate of Practice or are residing abroad (whether holding Certificate of Practice or not), unless exempted, are required to:
Complete at least 45 CPE credit hours of structured/unstructured learning in each rolling three-year period
Complete minimum 10 CPE credit hours of structured/unstructured learning in each year.

Amendments to IFRS 2 Share-based Payments

2008-01-18T12:30:00.000+05:30

On 17 January 2008, the International Accounting Standards Board (IASB) issued a number
of amendments to IFRS 2 Share-based Payment. The amendments clarify the definition of
vesting conditions and the accounting treatment of cancellations by the counterparty to a
share-based arrangement.
The revised Standard is effective from 1 January 2009. Earlier application is permitted.
Vesting conditions
Vesting conditions are the conditions imposed under a share-based payment arrangement
that the counterparty (whether an employee or otherwise) must satisfy in order to receive
cash, other assets or equity instruments of the entity. Prior to the amendments, IFRS 2
stated that vesting conditions include service conditions (which require the counterparty
to complete a specified period of service) and performance conditions (which require
specified performance targets to be met – for example, a specified increase in the entity’s
profit over a period of time). The Standard was silent as to whether other features of a
share-based payment arrangement could fall within the definition of vesting conditions.
The January 2008 amendments:
• clarify that vesting conditions are those conditions that determine whether the entity
receives the services that result in the counterparty’s entitlement;
• restrict the definition of vesting conditions to include only service conditions and
performance conditions; and
• amend the definition of performance conditions to require the completion of a service
period in addition to specified performance targets.
All features of a share-based payment arrangement other than service conditions and
performance conditions will be considered to be non-vesting conditions.
IFRS 2 specifies that, when estimating the fair value of equity instruments
granted, an entity shall take into account:
• all non-vesting conditions; and
• vesting conditions that are market conditions

Welcome

2008-01-17T22:08:00.000+05:30

Welcome to the blog of AIISAA - The Ultimate Financial KPO that promotes global reach of its networked members. Here you will find news and updates on all indian and international laws, circulars, notifications, something about accounting standards, IFRS, auditing standards. All readers of this blog are invited to comment on the posts. This blog also seeks to build up a network of specialised professionals.