As reported in this month's international and UK roundups, global accounting networks are responding to the consequences of the credit crunch. By Nick Topazio, financial reporting specialist, CIMA.
International
Accounting networks respond to credit crunch challenge
The world's six largest accounting networks have issued a paper to improve awareness of International Financial Reporting Standards (IFRS) requirements. The aim is help companies to determine fair values of financial assets and liabilities and related disclosures in current market conditions.
The paper does not seek to amend or interpret IFRS. It aims to set out the requirements of existing IFRS literature only.
World Bank opens financial reporting centre
The World Bank has opened the Vienna Centre for Financial Reporting Reform (CFRR) to help countries in Europe and Central Asia meet financial reporting standards for EU accession. The centre will also focus on meeting the emerging needs of middle income countries in the region.
CFRR will provide advice and analysis on accounting policy reforms, build capacity with civil servants from governments in the region, and provide cross support with other bank operations in the region.
The centre is supported by a wide range of sponsors, including the European Commission, Austrian Development Agency, Austrian Government, USAID and the Foreign Ministries of the Japan, Netherlands, Canada and Ireland.
Read the World Bank press release.
IASB invites comment on IFRS changes
The International Accounting Standards Board (IASB) has asked for comment on proposed amendments to IFRS 1 on first-time adoption of IFRS and IAS 27 on consolidated and separate financial statements.
The draft changes were developed in response to comments and consultation on a related exposure draft published in January 2007. See the IASB website page.
The board is also asking for comment on proposed changes to IFRS 2 on share based payment and an IFRS 2 interpretation on group and treasury share transactions.
The proposals are a response to requests for guidance on how a group entity that receives goods or services from suppliers should account for arrangements where the entity is not obliged to make the required share based cash payments.
The proposed change clarifies that IFRS 2 applies to these types of arrangements. The proposed amendment to the interpretation (IFRIC 11) specifies that the entity should measure the goods or services in accordance with the requirements for cash, settled share-based payment transactions.
See the IASB website page.
United Kingdom
FRC calls for extra diligence during credit crisis
The credit crunch has increased risks to confidence in corporate reporting and governance, according to the Financial Reporting Council (FRC). Market turbulence has affected credit availability for many companies.
The FRC believes the resulting increase in risks call for extra diligence from preparers of accounts, members of audit committees and auditors this year.
The FRC has produced a set of questions for audit committees to consider.
Read the guidance here.
Consultation on proposed changes to the combined code
The FRC is consulting on two possible changes to the combined code on corporate governance.
The effect of these proposals would be to remove the restriction on an individual chairing more than one FTSE 100 company. For listed companies outside the FTSE 350, it is proposed to allow the company chairman to be a member of, but not chair, the audit committee, provided he or she was considered independent on appointment.
Comments are requested by 14 March 2008.
Read the press release and guidance to submitting comments.