IASC on derivatives.

IASC to Consider U.S. Financial Instruments Standards

According to Sir Bryan Carsberg, secretary-general of the International Accounting Standards Committee, the IASC staff has proposed that its board adopt—on an interim basis—the Financial Accounting Standards Boards rules on financial instruments reporting, including the forthcoming FASB standard on derivatives disclosure. The IASC board was expected to decide on the staff proposal early this month.

By adopting the FASB standards, the IASC should be able to meet its goal of completing a core set of standards by April 1998. The IASC had reached an agreement with the International Organization of Securities Commissions (IOSCO) in April 1995 to complete core standards the IOSCO could endorse for cross-border offerings and listings.

To fulfill its own due process requirements, the IASC board must first issue an exposure draft proposing the adoption of the FASB standards. Carsberg said he was confident the IASC board would approve such a draft.

IASC Project Manager Paul Pacter told the Journal that, although the IASC has never adopted another countrys standards, he agreed with Carsberg it was likely the FASB standards would be adopted. "The only realistic way to fulfill our agreement with IOSCO is to adopt the U.S. financial instruments standards."

An interim solution

Carsberg emphasized that adopting the FASB standards would be only an interim step and the IASC would have to join with national standard setters, including the FASB, to develop a harmonized, comprehensive international standard on financial instruments.

Before disclosing the IASC board proposal, Carsberg had met with both FASB Chairman Edmund Jenkins and Securities and Exchange Commission Chief Accountant Michael H. Sutton to solicit their thoughts on the IASCs intentions. Jenkins called the proposal "a significant step toward the IASCs goal of developing a high-quality core set of international standards." The SEC has taken a more "wait-and-see" approach. Sutton told the Journal the SEC staff would continue to monitor the IASCs progress toward a core set of standards and provide input at the appropriate times.

More information on the financial instruments proposal, as well as the international accounting standards project, is available on the IASC Web site at http://www.iasc.org.uk.

CPE Direct:
Major Benefits for Journal Readers
Now theres another good reason for keeping up with the Journal. American Institute of CPAs members can earn up to 24 continuing education credits per year by reading selected Journal articles, completing four quarterly study guides and passing four quarterly examinations.
An annual subscription costs $159. For information or to order, call 800-862-4272 and select option #1.

IASC Issues Two New Exposure Drafts

The International Accounting Standards Committee is two steps—and two exposure drafts—closer to completing a core set of accounting standards that, if approved by the International Organization of Securities Commissions, could be used for cross-border offerings and listings. The two new EDs, E57, Interim Financial Reporting , and E58, Discontinuing Operations , are expected to be finalized by spring 1998, according to IASC Project Manager Paul Pacter.

What to include in your report

The interim reporting proposal would provide guidance for the business that prepares and reports financial information for a period ending on a date other than its yearend. The draft does not mandate which companies must publish interim reports, how frequently they are required or how soon they must appear after the end of an interim period. "The IASC decided such requirements are regulatory by nature and are best handled by national governments, securities regulators, stock exchanges and accounting bodies," said Pacter.

E57 proposes that, at a minimum, interim reports include four condensed financial statements—the balance sheet, income statement, cash flow statement and a statement showing changes in equity. The notes to the interim reports would explain the events and changes significant to understanding the changes in financial position and performance of the enterprise since the last annual reporting date. Virtually none of the notes to the annual financial statements would be repeated or updated.

Closing shop

The discontinuing operations ED proposes that certain information about a planned discontinuance—both approved and publicly announced by the board of directors—should be disclosed in the notes to the enterprises financial statements. The proposal focuses on how to present a discontinuing operation in the financial statements and what information should be disclosed.

"When a company sells off a major portion of its business, its cash flows will experience an abrupt change," said Pacter. Analysts consider a discontinued operations disclosure of income and expense, cash flows and assets and liabilities vitally important. "This proposal would clearly segregate for the analysts the ongoing from the terminating activities," said Pacter.

Comments for E58 are due by November 15. Copies of E57 and E58 can be obtained for $16 each by writing the IASC at 167 Fleet Street, London EC4A 2ES, United Kingdom, by phone at 44-171-353-0565 or by e-mail at iasc@iasc.org.uk .

Guidance on Assurance Services

The International Federation of Accountants released for exposure guidance on assuring the credibility of financial information. The exposure draft, Reporting on the Credibility of Information , was approved by the IFAC international auditing practices committee (IAPC). Comments are due by February 15, 1998.

"There is a worldwide demand for services that assure the credibility of information," said Robert Roussey, IAPC chairman. "This guidance would help establish accountants as the primary providers of these assurance services."

The ED examines the framework and general principles of assuring information and builds on existing audit guidance, including that on the audit function to enhance the credibility of financial statements. The framework provided in the ED identifies the elements of an engagement to report on the credibility of information. It is intended to include current practices and it examines how those practices can be expanded.

The ED also provides guidance on the objectives and principles governing the assurance services engagement. For example, the guidance asserts that accountants must follow the IFAC Code of Ethics for Professional Accountants . It also explains what process accountants should use for an assurance services engagement, from acceptance through quality control, planning and conduct, obtaining evidence and documentation.

The ED includes an appendix of example reports that comply with the framework and the general principles. Comments on the ED should be addressed to John Gruner, IFAC director general. Copies are available from the IFAC by phone at 212-302-5952 or on the Web at http://www.ifac.org .


Year-end tax planning and what’s new for 2016

Practitioners need to consider several tax planning opportunities to review with their clients before the end of the year. This report offers strategies for individuals and businesses, as well as recent federal tax law changes affecting this year’s tax returns.


News quiz: Retirement planning, tax practice, and fraud risk

Recent reports focused on a survey that gauges the worries about retirement among CPA financial planners’ clients, a suit that affects tax practitioners, and a guide that offers advice on fraud risk. See how much you know with this short quiz.


Bolster your data defenses

As you weather the dog days of summer, it’s a good time to make sure your cybersecurity structure can stand up to the heat of external and internal threats. Here are six steps to help shore up your systems.