As the direct result of December 2005 talks between SEC Chairman Christopher Cox and Committee of European Securities Regulators (CESR) Chairman Arthur Docters van Leeuwen, the two groups in August published and implemented a joint work plan on the application by international companies of international financial reporting standards (IFRSs) in the United States and U.S. GAAP in the European Union ( www.sec.gov/news ). Such cooperation will promote the development of high-quality accounting standards, the high-quality and consistent application of IFRSs around the world, full consideration of international counterparts’ positions regarding application and enforcement and the avoidance of conflicting regulatory decisions on the application of IFRSs and U.S. GAAP. In addition the staff of the SEC and CESR will forge a closer dialogue on the modernization of information technology for financial reporting and disclosure and regulatory platforms for risk management.
The International Accounting Standards Board (IASB) also took steps to encourage consistent and rigorous application of IFRSs and to facilitate constituents’ input to the board’s agenda ( www.iasb.org ). Foremost among these actions was the IASB’s decision to give companies until January 1, 2009, to apply IFRSs under development or major amendments to existing standards. This will lengthen the time countries have to prepare for new standards and provide sufficient opportunity for them to comment on conceptual issues and for the IASB to hold public roundtable discussions on key topics.
The International Ethics Standards Board for Accountants, an independent standard-setting board within IFAC, revised the Code of Ethics for Professional Accountants by updating the definition of a network firm, which is required to be independent of an audit client of another firm within the network. The revised definition classifies firms as network firms if they belong to a larger structure that is aimed at cooperation and at profit- or cost-sharing, or that shares ownership, control or management; quality control policies and procedures; business strategy; a brand name; or a significant part of professional resources. The new provision is effective for assurance reports dated on or after December 31, 2008, and is available free at www.ifac.org/store/Category.tmpl?Category=Ethics .
Another IFAC body, the IAASB, approved A Guide for National Standard Setters That Adopt IAASB’s International Standards but Find It Necessary to Make Limited Modifications ( www.ifac.org/IAASB/downloads/modification_policy_position.pdf ). The nonauthoritative paper states the board’s position on the extent to which a national standard setter that adopts IAASB-issued international standards can modify them while still asserting its standards conform to their international counterparts.