IAS Knowledge is a joint venture between CCH and the ICAEW, aimed at helping accountants worldwide to better understand the introduction of International Accounting Standards. Our aim is to provide as much free information as possible, to help you. 

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What's new on IAS Knoweldge....

• IASB Decision Summaries
• IFRS 1 summary - first International Accounting Standard published by the IASB on first time adoption (pdf)
• Headliners - newsletter containing notes and summaries of the latest IASB meetings
• IASB and ASB updates - incorporating the changes taken from Accountancy November 2003
• FAQs

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What's in this issue?

European Commission endorsement
Chancellor confirms IAS accounts for tax purposes in the UK
Improved standards in time for Christmas
The future of the performance statement
Decommissioning, restoration and similar liabilities - IFRIC proposals

European Commission endorsement

On 29 September 2003 the European Commission adopted a Regulation endorsing International Accounting Standards (IAS) and related interpretations. The Commission's adoption of this implementing Regulation follows the Accounting Regulatory Committee's (ARC) unanimous endorsement of IAS in July. As reported in the last newsletter the endorsement includes all existing IAS and SICs except for the two Standards on Financial Instruments, IAS 32 and 39, and their related interpretations.

In the Press Release issued by the Commission, Internal Market Commissioner Frits Bolkestein said:

_Adoption by the Commission of this Regulation, endorsing most of the existing International Accounting Standards and publishing them in the EU's official languages, will help the 7,000 or so listed EU companies affected to get ready for 2005, when their consolidated accounts will have to be in line with IAS. That will put an end to the current "Tower of Babel" in financial reporting, improve competition and transparency and make the free movement of capital much easier. Meanwhile I encourage the IASB and interested parties to conclude their dialogue on IASs 32 and 39, so that the Commission will then be in a position to consider these standards too, in time for 2005._

The Official Journal of the European Union includes the text of all those IASs and related interpretations which have been endorsed. Click here to go to the Official Journal.

The Chancellor in his pre-budget speech on 10 December 2003 confirmed that companies applying International Accounting Standards will not have to submit a separate set of accounts to the Inland Revenue in the UK.

In an ICAEW Press Release Paul Druckman said: _We welcome the Government's confirmation that companies adopting International Accounting Standards (IAS) can use these figures for preparing their UK corporation tax return and also the decision to consult further on the implications of moving to IAS. We need to ensure that the UK tax system is well prepared to cope with the introduction of IAS._

_It is essential that the tax implications of IAS are addressed at an early stage as moving to IAS is going to be difficult enough for UK plc without uncertainties over the tax position._

The Inland Revenue continues to work with various consultative groups to look at the detail of the international standards. Work to date includes ensuring that the R&D tax rules continue to receive special tax treatment regardless of their accounting treatment; maintaining the current tax treatment of most hedging arrangements using derivative contracts and foreign currencies; and amending legislation for the changes made by IAS 39 on the recognition and measurement of financial instruments and any consequential changes made to UK GAAP.

The International Accounting Standards Board (IASB) plans to publish 12 _improved_ standards shortly. The improved standards are due to be published in one bound volume, the text of the provisionally approved standards is available electronically through the IASB's subscription service. At the time of writing 9 of the 12 standards were available electronically.

The 12 standards in question are (those available electronically in their _provisional_ form are highlighted in bold):

• IAS 1 Presentation of Financial Statements
• IAS 2 Inventories
• IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
• IAS 10 Events after the Balance Sheet Date
• IAS 16 Property, Plant and Equipment
• IAS 17 Leases
• IAS 21 The Effects of Changes in Foreign Exchange Rates
• IAS 24 Related Party Disclosures
• IAS 27 Consolidated and Separate Financial Statements
• IAS 28 Investments in Associates
• IAS 33 Earnings per Share
• IAS 40 Investment Property

IAS 32 and 39 on financial instruments are part of the Board's improvements project. These two standards will be published separately but are also planned to be finalised before Christmas. The plan is to issue IAS 39 without the recently exposed proposals on portfolio hedge accounting, which will be published in the first quarter of next year.

For the text of the IASs and SIC's which have been endorsed, and reported in the Official Journal, click here.

The IASB originally planned to issue an exposure draft of its proposals on Reporting Comprehensive Income before the end of 2003. However, the project timetable has recently been under review and the Board has now announced that it will issue a Discussion Paper in the first instance. The purpose of the Discussion Paper being so as to consult widely, to inform and educate and to explain the provisional decisions that the Board has made to date.

On 4 September 2003 the International Financial Reporting Interpretations Committee (IFRIC) published a draft interpretation D2: Changes in decommissioning, restoration and similar liabilities. The proposals contain guidance on whether changes in the estimate of a liability for certain decommissioning and restoration costs should be capitalised or recognised immediately in the income statement. The proposals draw on the requirements in IAS 16 Property, plant and equipment on the cost of the item capitalised and IAS 37 Provisions, contingent liabilities and contingent assets on the recognition of the corresponding liability.

IFRIC issued the proposed guidance as concerns were raised that there was a lack of consistent industry practice in accounting for changes in decommissioning, restoration and similar liabilities.

The proposed interpretation would require the capitalisation of the proportion of the change in estimate which relates to the future use of the asset with any excess being recognised immediately as a profit or loss.

To go to the IASB's press release click here.

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CESR calls for additional guidance on the transition to IFRS

The Committee of European Security Regulators (CESR) issued a consultation paper _Draft recommendation for additional guidance regarding the transition to IFRS_. Included in the recommendations CESR proposed that issuers should communicate in their 2003 financial statements _how they intend to carry out the transition to IFRS and explain in a narrative form the key differences in accounting methods that have been identified_. CESR goes on to propose that quantification of the impact should be provided in the 2004 financial statements.

In a press release issued by the ICAEW in response to the CESR consultation the Institute _urged companies to seek to explain the impact of applying these new standards to investors and analysts as soon as practicable. This should be done in a structured way, for example by including in 2003 annual reports informative narrative on the preparatory process._

To read the ICAEW press release click here

To read the full ICAEW response to the consultation click here

To read the CESR consultation paper click here (fifth item on the list)

With PWC IFRS GUIDES
get to grips with IAS/IFRS bit by bit ....or all at once

Written by PwCs_ UK Accounting Technical Department

Each book tackles ONE COMPLETE STANDARD and;

• gives you the right level of detail for you to understand the requirements;
• details the key differences from UK GAAP and explains them;
• includes worked examples illustrating what is required from first time disclosure;
• provides demonstrative extracts from company accounts, and
• produces the standard in full in the appendix.

Pick from the following:

• Understanding IFRS 1: First time adoption
• Understanding IAS 7: Cashflow statements
• Understanding IAS 14: Segment reporting
• Understanding IAS 18: Revenue recognition
• Understanding IAS 34: Interims and prelims

Buy four and save £10 - each book is just £25. However should you buy MORE THAN THREE, YOU SAVE £10 on your total order value!

To order online click here, or call Customer services on tel 0870 777 2906 or e-mail your order to customerservices@cch.co.uk

Headliners
Headliners sets out a summary of the latest decisions taken by the IASB at its Board meetings. It is available on IASknowledge.com. (Note - you will need Adobe Acrobat in order to view this file.)

Future IASB meetings

The next IASB meeting is in London on 17-19 December. All IFRIC meetings in 2004 will be held in London.

Meeting dates, tentative agenda and additional details about the next meetings will be posted to the IASB website before the meeting.