GAAP ALERT No.17/2008 To read online click here

30 September 2008

By Colin Parker B.Bus FCA MAICD
Principal, GAAP Consulting, colin@gaap.com.au
Member of the Australian Accounting Standards Board

Hot Spot: IASB Update on Projects Affected by the Credit Crisis
AASB September Meeting Highlights
AASB Issues Hedging Amendments
Revised AASB 1039 ‘Concise Financial Reports’ Issued
FRC August and September Meeting Highlights
IASB September Meeting Highlights
Revised Definition of Discontinued Operations Proposed by IASB
IASB Proposes Amendments to Retrospective Application in IFRS 1
IASB Draft Report on Measuring and Disclosure of Fair Value of Financial Instruments
AUASB Releases Standards on Review Engagements
AUASB Reissues ASAE 3100 ‘Compliance Engagements’
APES 210 Conformity with Auditing and Assurance Standards issued APESB
Clarity Drafting Policies and Procedures Released by AUASB
James Hardie Group Civil Action – Implications for Many
CPA Australia Presentation Feedback
Outstanding Exposure Drafts

Hot Spot: IASB Update on Projects Affected by the Credit Crisis

The IASB has provided an update on its projects affected be the credit crisis. In addition to the IASB Expert’s Advisory Panel on Measuring and Disclosure of the Fair Value of Financial Instruments draft document, the following activities are underway:
Consolidation: This project re-examines and clarifies the criteria for consolidation of all entities, with a particular focus on the consolidation of special purpose and structured investment entities. It will also address the disclosure requirements for consolidated and non consolidated entities. A first draft of a revised standard on consolidation has been prepared, and will be discussed during a series of round-table discussions. An exposure draft of the revised standard is expected later this year, with the issue of the standard in the second half of 2009
Derecognition: This project seeks to improve accounting guidance on when financial instruments may be removed from an entity’s balance sheet by securitisation or similar techniques. An exposure draft will be released after the IASB has published the exposure draft on consolidation
Disclosures: At the IASB September meeting a comprehensive package of proposed amendments to IFRS 7 ‘Financial Instruments: Disclosures’ will be considered. These amendments include disclosures related to off-balance sheet risk, fair value measurement and financial instrument risk, including disclosures related to liquidity risk. The IASB expects to publish the proposed amendments later this year as an exposure draft
IAS 39 ‘Financial Instruments: Recognition and Measurement’: Work has commenced on replacing IAS 39 with the first step being the discussion paper ‘Reducing Complexity in Reporting Financial Instruments’, and
Global Convergence of Accounting Standards: IASB has expedited discussions with standard-setters representing major capital markets, and has set 2011 as a target date to complete the projects described in its Memorandum of Understanding with the FASB, along with the completion of projects described by the ‘Tokyo Agreement’ of 2007 between the IASB and the Accounting Standards Board of Japan.

“As Australia adopts IFRS standards verbatim, the results of these projects will flow though to us”, stated Colin Parker, Principal, GAAP Consulting, and a member of the AASB. “These and other IASB projects will come to a conclusion within next 6-18 months, and will fundamentally change the face of financial reporting; be prepared, he stated. “Australian constituents should also be mindful of the AASB’s domestic work program on not-for-profit entities, superannuation plans, and public sector entities; a number of projects are well advanced”, he concluded.

AASB September Meeting Highlights

Highlights of the 24 September meeting of the AASB included:
Superannuation Plans and ADFs: Considered a revised version of the draft ED for a replacement Standard for AAS 25 ‘Financial Reporting by Superannuation Plans’, concentrating on the proposed standard requirements. The Foreword, Application Guidance and Basis for Conclusion were not discussed. It is envisaged that the exposure draft will be finalised by the end of the year
GAAP/GFS Harmonisation for Entities within the GGS: Reconsidered tentative decisions relating to GAAP/GFS harmonisation for entities within the GGS made at its May 2008 meeting. Decided that the approach to GAAP/GFS harmonisation for entities within the GGS should differ from that adopted in AASB 1049 for GGSs and whole of governments. GAAP/GFS harmonisation for entities within the GGS would be achieved by those entities adopting applicable Australian Accounting Standards and by amending AASB 101 ‘Presentation of Financial Statements’. The amendments to AASB 101 would specify that those entities should adopt the financial statement formats prescribed in AASB 1049, in particular, the transactions/other economic flows split in the statement of comprehensive income, but exclude the key fiscal aggregates section at the foot of the statements. A draft ED that proposes amendments to AASB 101 will be considered at a future meeting. The proposals will apply to all entities within the GGS (whether incorporated or unincorporated, and whether for-profit or not-for-profit)
Conceptual Framework: Discussed a draft submission on the IASB-FASB Discussion Paper ‘Preliminary Views on an improved Conceptual Framework for Financial Reporting: The Reporting Entity’, and will further consider a draft submission at its next meeting
Interpretations: Made AASB 1048 ‘Interpretation and Application of Standards’ (September 2008) which includes the addition of the following principal pronouncements: AASB Interpretation 15 ‘Agreements for the Construction of Real Estate’; AASB Interpretation 16 ‘Hedges of a Net Investment in a Foreign Operation’; AASB Interpretation 1003 ‘Australian Petroleum Resource Rent Tax’; and AASB Interpretation 1038 ‘Contributions by Owners Made to Wholly-Owned Public Sector Entities’ (December 2007). The revised AASB 1048 is applicable to annual reporting periods ending on or after 30 September 2008
Amendments to AASB 1049 for Consistency with AASB 101: Considered the responses received on ED 163 ‘Proposed Amendments to AASB 1049 for Consistency with AASB 101’ and made AASB 2008-9 ‘Amendments to AASB 1049 for Consistency with AASB 101’. AASB 2008-9 is applicable to annual reporting periods beginning on or after 1 January 2009. Early adoption is permitted provided AASB 101 ‘Presentation of Financial Statements’ (September 2007) is applied at the same time, and
10 October Meeting: Likely agenda items include: Conceptual Framework (ITC 17 and ED 164); Criteria for Modifying IFRSs for Not-for-profit Entities; Discontinued Operations; Interpretations; Process for Adopting IFRSs; and Superannuation Plans and ADFs.

AASB Issues Hedging Amendments

The AASB has issued AASB 2008-8 ‘Amendments to Australian Accounting Standards – Eligible Hedged Items’. The amendments clarify whether the hedge accounting principles should be applied in particular situations. The requirements of AASB 2008-8 are applicable from 1 July 2009, with early adoption permitted.

Revised AASB 1039 ‘Concise Financial Reports’ Issued

The AASB has issued revised AASB 1039 ‘Concise Financial Reports’ which includes changes to terminology and descriptions of the financial statements to achieve consistency with that used in AASB 101 ‘Presentation of Financial Statements’, and changes to the disclosure requirements relating to segments to achieve consistency with the equivalent requirements in AASB 8 ‘Operating Segments’. AASB 1039 is applicable for annual reporting periods beginning on or after 1 January 2009; early adoption is permitted.

FRC August and September Highlights

Highlights of 12 August meeting of the Financial Reporting Council (FRC) included:
IASB Update by Sir David Tweedie (Chairman of IASB): Outlined that the next 12 months will determine accounting standards for the next ten years with nine key projects on the IASB’s work agenda that are scheduled to be substantially finished by 2011. The projects are:

Fair Value Measurement: Plans to issue guidance in the next few weeks
Consolidation: An exposure draft is due for release in the fourth quarter of 2008 with a revised standard being issued in the second half of 2009
Derecognition: This project aims to reconcile the different approaches the IASB and US GAAP have to derecognition with initial staff findings to be discussed at the joint meeting IASB/FASB meeting in October
Financial Instruments: The discussion paper ‘Reducing Complexity in Reporting Financial Instruments’ is open for comment until 19 September 2008
Financial Statement Presentation: A discussion paper is expected to be published in the third quarter of 2008
Liability/Equity: The IASB and the FASB are conducting a joint project to develop concepts for revenue recognition, and a general standard based on those concepts. The latter would replace IAS 11 ‘Construction Contracts’ and IAS 18 ‘Revenue’. A Discussion Paper will be released in the second half of 2008
Pensions: Comments on Discussion Paper on Amendments to IAS 19 were sought by 26 September 2008
Leases: Discussion Paper is expected to be released in the fourth quarter of 2008 that will propose fundamental change in accounting for leases

Outcomes of G100/FRC Review of Australia’s Experience in Implementing IFRS: The FRC and G100 commissioned PriceWaterhouseCoopers to survey G100 members on their experience with IFRS. The results will be considered at a future meeting. An FRC/G100 workshop was held on 11 August, and as result, a working group was established to consider and make recommendations to the IASB on disclosures, and
Emissions Trading: The IASB is working towards having a standard for emissions trading finalised by 2010. If the standard is not finalised, Sir David considered Australia could apply the draft standard. Sir David provided an assurance that Australia would be provided flexibility to adopt a draft standard and still remain IFRS compliant.

Highlights of 9 September FRC meeting included:
IFRS Workshop: On 11 August 2008, the FRC and G100 jointly sponsored a workshop on the Australian IFRS experience which considered a report collated by PricewaterhouseCoopers from a survey of G100 members on their experiences adopting IFRS. The report will be released publicly.
Public Sector Accounting Workshop: Mr Tim Youngberry, First Assistant Secretary with the Department of Finance and Deregulation, lead a discussion on public sector accounting issues. The FRC has scheduled a workshop with key participants for 5 November 2008 which key issues including transaction neutrality, ex-post versus ex-ante reporting, Government Finance Statistics (GFS) reporting requirements, and New Zealand's approval to Public Sector Auditing Standards.

IASB September Meeting Highlights

Highlights of the 15-19 September IASB meeting included:
Credit Crisis: Discussed IASB’s responses to the credit crisis:

Inactive markets: IASB’s expert advisory panel had released a draft report that provides information and educational guidance for measuring and disclosing fair values. The Panel’s discussions are useful for future standards, including the forthcoming fair value measurement standard, and possible amendments to IFRS 7 ‘Financial Instruments: Disclosures’
Disclosure – Off Balance Sheet Entities: Decided to propose disclosure requirements concerning : the application of consolidation policy and financial effect of the consolidation decision when significant judgement has been applied; and the nature of an entity’s involvement with off-balance sheet entities
Disclosure – Liquidity Risk: Discussed changes to the liquidity risk disclosure requirements in IFRS 7, and decided that those requirements should apply to financial liabilities that are settled in cash or another financial asset. For derivative financial liabilities, a quantitative maturity analysis based on how the entity manages the liquidity risk associated with such instruments is proposed. Additional disclosures would be required for particular types of derivatives. For non-derivative financial liabilities (including hybrid financial liabilities), disclosure should be made of a quantitative maturity analysis based on the instruments’ earliest contractual maturities
Disclosure – Fair Value of Financial Instruments: Decided to amend IFRS 7 to require entities to classify and disclose fair value measurements using a fair value hierarchy (Levels1 to 3) that is consistent with the hierarchy in IAS 39 ‘Financial Instruments: Recognition and Measurement’. New disclosures are proposed, including quantitative disclosures about fair value measurements in a tabular formats; for fair value measurement using significant unobservable inputs, a reconciliation from period to period along with a narrative description about any transfers between levels of the hierarchy and the reasons for those transfers; for fair values that are disclosed but not recognised, an indication of the level of the hierarchy in which the instrument is classified

Annual Improvements: Decided to amend IFRIC 13 ‘Customer Loyalty Programmes’ to clarify the measurement guidance for the fair value of the award credits. The amendment is to be applied prospectively
Extractive Activities: Final education session for the extractive activities research project, discussed some general features of a potential disclosure model for minerals and oil & gas extractive activities. Discussion paper planned for completion by the end of 2008
Fair Value Measurement (Proposed Exposure Draft): Decided the fair value of an asset should reflect its highest and best use (the use by market participants that would maximise the value of the asset or of the group of assets in which the asset would be used. It considers uses of the asset that are physically possible, legally permissible and financially feasible at the measurement date.) In relation to blockage factors confirmed that the measurement objective should be to measure fair value at the individual instrument level. Decided to exclude blockage factors from a fair value measurement at all levels of the fair value hierarchy; that a fair value measurement should exclude other discounts or premiums (such as a control premium) that apply to a holding of financial instruments and do not apply to the individual instrument
Financial Instruments with Characteristics of Equity: Education session led by representatives from the European Association of Co-operative Banks to discuss the financial instruments issued by European co-operatives
First-time Adoption of IFRSs: Considered matters arising from a review of a draft of an exposure draft proposing amendments to IFRS 1 ‘First time Adoption of International Financial Reporting Standards’. On 25 September 2008, IASB published an exposure draft Additional Exemptions for First-time Adopters
IFRS for Private Entities: Made the following tentative decisions:

Income taxes: Rejected a taxes payable with disclosure approach for deferred tax, but are looking at ways to simplify deferred tax recognition and measurement (e.g., recognising deferred taxes only for those differences between accounting and tax treatment of items of income or expense that are expected to reverse, and affect an entity’s cash flows in a relatively short term; and starting from the temporary difference approach in IAS 12 but making simplifications in areas considered particularly complex)
Foreign Currency Translation: Prohibit recycling through profit or loss any cumulative exchange differences that were previously recognised in equity on disposal of a foreign operation. Not allow private entities to elect to deem their local currency as their functional currency even where the law requires financial statements to be presented in the local currency
Held for Sale: No ‘held for sale’ classification for non-financial assets, or groups of assets and liabilities, as is required by IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. The decision to sell an asset is an impairment indicator
First-time Adoption: All of the optional exemptions for first time adopters in IFRS 1 ‘First-time Adoption of International Financial Reporting Standards’ are to be included
Disclosures: Numerous disclosure simplifications were agreed and some new disclosures added
Insurance Contracts: Education session on a proposal by respondents to using a measurement basis that reflects that the insurer intends (and in most cases must) settle the liability by paying the contractual benefits as they become due, rather than by transferring the liability to a third party

Related Party Disclosures: Decided to propose a different exemption for state-controlled entities, than that proposed in the exposure draft. The new proposal would exempt an entity from disclosing transactions with a state if that state is a related party only because it has control, significant influence or joint control over the entity; and transactions with another entity that is a related party only because the same state has control, significant influence or joint control over both entities. This proposed exemption for state controlled entities, and a revision to the definition of a related party will be re-exposed towards the end of the year
Revenue Recognition: Decided that in most cases it would not be necessary to remeasure a performance obligation at each financial statement date. A performance obligation would be remeasured by exception when deemed onerous. The discussion paper is expected to be published later this year
Share-based Payment: Decided not to address requests involving reconsideration of the principles underlying IFRS 2, but to action some of the application issues in the annual improvements project, or other projects. Consider addressing differences between IFRS 2 and US GAAP after progress has been made on related projects (e.g., tax and on financial instruments with characteristics of equity), and
Additional Board Meeting on 2 October: To discuss potential amendments to IFRS 7 ‘Financial Instruments: Disclosures’, and a revised version of the staff draft of the forthcoming ED of a proposed IFRS on consolidation.

Revised Definition of Discontinued Operations Proposed by IASB

The IASB released an exposure draft of proposed amendments to IFRS 5 ‘Non Current Assets held for Sale and Discontinued Operations’ that describes revision to the definition of discontinued operations, and requires 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 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.

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. Comments on the proposals in the exposure draft are sought by 23 January 2009.

IASB Proposes Amendments to Retrospective Application in IFRS 1

The IASB has released an exposure draft of proposed amendments to IFRS 1 ‘First-time Adoption of International Financial Reporting Standard’ that addresses 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 exemptions from retrospective application of IFRSs for oil and gas assets using the full cost method and for operations subject to rate regulation, and for 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 open for comment until 23 January 2009.

IASB Draft Report on Measuring and Disclosure of Fair Value of Financial Instruments

A draft document ‘IASB Expert Advisory Panel on Measuring and Disclosure of the Fair Value of Financial Instruments’ summarises the discussions of the panel has been released for comment. It is intended to provide useful information and educational guidance for measuring and disclosing fair values; it does not establish new requirements for entities applying IFRSs. Entities will find the guidance about the processes used and the judgements made when measuring and disclosing fair value contained in this draft document to be useful in meeting the objectives and requirements of IFRSs.

The panel’s objective was to assist the IASB in reviewing the valuation processes used by practitioners. The panel was requested to consider possible enhancements to the guidance on valuation and disclosures of financial instruments and on disclosures when markets are no longer active.

The 49 page two-part report addresses measurement and disclosure issues: The measurement topics are: fundamental value versus fair value; active versus inactive markets; forced transactions; different estimates of fair value; valuation adjustments; understanding the instrument; evaluating available market information; and using models. The disclosure topics are: Enhanced disclosures about financial instruments of particular interest to users; Description of instruments of particular interest to users, disclosure of valuation techniques, disclosure of inputs used; General disclosures about fair value measurement; Aggregation and granularity of disclosure; Disclosure issued associated with frequency, control environment, valuation techniques, fair value hierarchy, unobservable inputs, and changes in own credit risk and reconciliation of movements in the fair values of instruments measured using unobservable inputs.

Feedback on the draft document should be sent Hilary Eastman at heastman@iasb.org by 3 October 2008. Feedback received will not be put on public record. The panel’s discussions will help with the development of an exposure draft on fair value measurement, which the IASB intends to publish in mid-2009.

AUASB Releases Standards on Review Engagements

The AUASB has completed revisions of standards relating to reviews of historical financial information with the release of two new standards and amendments to an existing standard. The new standards are ASRE 2400 ‘Review of a Financial Report Performed by an Assurance Practitioner who is not the Auditor of the Entity’, and ASRE 2405 ‘Review of Historical Information Other than a Financial Report’. ASRE 2410 ‘Review of an Interim Financial Report Performed by the Independent Auditor of the Entity’ has been amended.

The revisions were necessary to replace the out-dated standard AUS 902 ‘Review of Financial Reports’, which had broad application covering reviews of financial information, both historical and prospective, and non-financial information. Ms. Merran Kelsall , AUASB Chairman, said the standards are now designed to apply to different types of review engagements. “Instead of having to adapt a generalised standard to specific situations, auditors and practitioners now select the appropriate standard from one of the suite of standards applicable to reviews,” Ms. Kelsall said.

The AUASB has also published a guide ‘Explanatory Guide to AUASB Standards Applicable to Review Engagements’ to help users understand the development and application of the review engagements. “The tables and diagrams in the guide are particularly helpful in selecting the appropriate standard for each particular type of review engagement,” Ms. Kelsall said.

These standards, and the amendments to ASRE 2410, are operative for review engagements commencing on or after 1 October 2008.

Justin Reid, Associate, GAAP Consulting, points out that practitioners should become familiar with the ‘Explanatory Guide to Review Engagements’ released in April 2008. The guide provides information on the AUASB Standards on Review and Assurance Engagements.

Standards on Review Engagements (ASRE) and Standards on Assurance Engagements (ASAE) are mandatory for members of the accounting bodies by virtue of APES 210 ‘Conformity with Auditing and Assurance Standards’. To date, the AUASB has recently released the following Review and Assurance Standards:
Standards on Review Engagements
•ASRE 2400 ‘Review of a Financial Report Performed by an Assurance Practitioner Who is Not the Auditor of the Entity’ (August 2008)
•ASRE 2405 ‘Review of Historical Financial Information Other than a Financial Report’ (August 2008)
•ASRE 2410 ‘Review of Interim and Other Financial Reports Performed by the Independent Auditor of the Entity’ (August 2008)
Standards on Assurance Engagements
•ASAE 3000 ‘Assurance Engagements Other than Audits or Reviews of Historical Financial Information’ (July 2007)
•ASAE 3100 ‘Compliance Engagements’ (reissued September 2008), and
•ASAE 3500 ‘Performance Engagements’ (July 2008).

“These standards should form a core part of the audit practitioners’ training program for 2008-9”, Justin stated. “It will also be important for the auditor to educate preparers and governance on these new and revised requirements”, he concluded.

AUASB Reissues ASAE 3100 ‘Compliance Engagements’

The AUASB reissued ASAE 3100 ‘Compliance Engagements’ as a result of various subsequent technical and editorial amendments. It replaces that standard of the same title issued in June 2008. ASAE 3100 establishes mandatory requirements and provides explanatory guidance for performing and reporting on compliance engagements other than audits or reviews of historical financial reports. It is operative for reporting periods or engagements commencing on or after 1 October 2008. Early adoption of this ASAE is permitted prior to this date.

Key topics in ASAE 3100 include: Relationship with Other ASAEs, ASAs and ASREs; Ethical Requirements; Quality Control; Elements of a Compliance Framework; Assessing the Appropriateness of the Subject Matter; Assessing the Suitability of the Criteria; Materiality; and Compliance Engagement Risk.

APES 210 ‘Conformity with Auditing and Assurance Standards’ issued APESB

The Accounting Professional & Ethical Standards Board (APESB) has released APES 210 ‘Conformity with Auditing and Assurance Standards’ which supersedes APES 410 of the same name. APES 210 will be effective from 30th September 2008. APES 210 sets the standards for members to comply with Auditing and Assurance Standards when they conduct Assurance Assignments or Assurance Engagements. APES 210 has retained the mandatory professional obligation that all members of the professional accounting bodies must comply with auditing and assurance standards.

Clarity Drafting Policies and Procedures Released by AUASB

The AUASB has released ‘Redrafting ASAs Drafting Policies and Rules’ that inform all interested parties as to the AUASB’s overall technical approach to the redrafting process. They address: Overall AUASB Redrafting Approach; Drafting Policies; and Drafting Rules (basic rules and amendments for legal, legislation and other necessary amendments). There are 43 AUASB pronouncements subject to the redrafting process: All 35 current ASAs (including ASRE 2410); Five ISAs without current equivalent ASAs; and Three other AUASB pronouncements (Glossary, Framework, and Foreword).

James Hardie Group Civil Action – Implications for Many

ASIC has commenced civil proceedings against seven former directors and three former company officers with the hearing to commence before Mr. Justice Gzell in Sydney in the NSW Supreme Court on 29 September 2008. The maximum penalties for each breach are $200,000 and disqualification from managing a corporation for such period as the court determines. The directors and officers are: Peter Macdonald - director and CEO of JHIL and JHINV; Peter Shafron - company secretary and general counsel of JHIL; Philip Morley - CFO of JHIL, director of Amaca Pty Ltd and Amaba Pty Ltd; Michael Brown - director of JHIL; Michael Gillfillan - director of JHIL; Meredith Hellicar - director of JHIL; Martin Koffell - director of JHIL; Geoffrey O'Brien - director of JHIL; Gregory Terry - director of JHIL; and Peter Willcox - director of JHIL.

The civil action was commenced by ASIC against ABN 60 Pty Ltd, formerly James Hardie Industries Limited (JHIL), James Hardie Industries NV (JHINV), and certain former directors and former officers of those companies. ASIC is seeking declarations that former directors and officers breached their duties owed to JHIL, and in the case of Mr. Macdonald, JHINV, and in the case of Mr. Morley, a former subsidiary of JHIL. If successful, ASIC will ask the Court to consider disqualifying those former officers and directors from managing corporations and to impose fines on them. ASIC also seeks declarations that JHIL and JHINV made misleading statements and contravened continuous disclosure requirements of the Corporations Act.

The Court will be asked to consider whether these former directors and officers failed to discharge their duties with due care and diligence. Having regard to the information of which they were aware and which was available to them at the relevant times, they did not take steps to ensure that JHIL did not contravene its obligations under the Corporations Act with respect to disclosures made concerning: the adequacy of funding to be made available in 2001 for victims of asbestos related diseases; and future plans relating to JHIL and partly paid shares issued by JHIL.

The civil action, which looks at the conduct of both executive officers and non-executive directors, will focus on the scope and content of the duties of executive officers that is the chief executive officer, the company secretary and general counsel, and the chief financial officer. The proceedings will also examine the obligations of non-executive directors in evaluating proposals put to the Board by the company's management.

According to ASIC, the proceedings should bring into sharp focus the fundamental responsibilities of both executive officers and non-executive directors who are ultimately responsible for significant public company decisions and the release of information concerning those decisions to the share market, to employees (including former employees), creditors and the public.

ASIC believes this action goes to the heart of the responsibilities of directors of public companies. Directors are asked by management to assess important strategic decisions for a company, which in some cases can amount to ‘betting the farm’, and to approve disclosure made to the market about those decisions. The case will provide guidance to executive officers and non-executives in these and similar situations. In future, this will benefit companies, their shareholders, employees and former employees who may be impacted by such decisions.

CPA Australia Presentation Feedback

Colin Parker, Principal, GAAP Consulting, in October presented a two-hour PD session on ‘Applying Asset Impairment & Valuation Techniques for Greater Accuracy’ for CPA Australia. His presentation exceeded all benchmarks with feedback comments included: “Clear/good humour/good notes”; “Interesting & thorough”; “Easily understood presentation & material”; “Excellent & informative session”; and “Kept the audience attention throughout session”. Colin and his GAAP Consulting colleagues are available to speak to CFOs, Boards and accounting firms on contemporary financial reporting and auditing topics.

Outstanding Exposure Drafts

Accounting

3 October ‘IASB Expert Advisory Panel on Measuring and Disclosure of the Fair Value of Financial Instruments’ – IASB
20 October ED 165 ‘Proposed Improvements to Australian Accounting Standards’ – AASB
31 October ED 166 ‘Simplifying Earnings per Share: Proposed amendments to AASB 133’ – IASB
7 November ‘Improvements to IFRS (Proposed amendments to International Financial Reporting Standards’ – IASB
5 December ‘Simplifying Earnings per Share (proposed amendments to IAS 33)’ – IASB
23 January ‘Discontinued Operations – Proposed Amendment to IFRS 5’ – IASB
23 January ‘Additional Exemptions for First-time Adopters: Amendments to IFRS 1’ – IASB

Auditing

15 October ASA 230 ‘Audit Documentation’, ASA 300 ‘Planning an Audit of a Financial Report’, ASA 540 ‘Auditing Accounting Estimates, including Fair Value Accounting Estimates and Related Disclosures’, ASA 560 ‘Subsequent Events’, ASA 570 ‘Going Concern’, and ASA 600 ‘Special Considerations – Audits of a Group Financial Report (including the Work of Component Auditors) – AUASB

Other

31 October Discussion Paper ‘Underlying Profit’ – Financial Services Institute of Australasia and the Australian Institute of Company Directors
‘Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities’ – IPSASB

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