Impact of IFRS on European banks

Ernst & Young has published “The Impact of IFRS on European Banks,” which analyses the 2005 annual financial statements of the 24 largest European banks reporting under IFRS and summarises the primary implications of the transition to IFRS. The analysis shows that adopting IFRS is having a significant impact on the balance sheet. For example, Groupe Banques Populaire recorded a gain of 22%, while Barclays saw a fall of 12% in reported equity value.

Meeting investor needs in an evolving global market

Recently, in Paris, the Global Public Policy Symposium released a new paper entitled Global Capital Markets and the Global Economy: A Vision from the CEOs of the International Audit Networks. The symposium was sponsored by the six largest accounting firm networks — PwC, KPMG, Deloitte, E&Y, BDO and Grant Thornton. The paper looks at what changes are required in global financial reporting and public company auditing to better serve global capital markets and is designed to be the beginning of a dialogue with all stakeholders on these issues. Details are available at www.globalpublicpolicysymposium.com.

European discussion paper on the conceptual framework

The European Financial Reporting Advisory Group (EFRAG) and the French accounting standard setter (Conseil National de la Comptabilite, or CNC) have jointly published a Discussion Paper titled The Conceptual Framework: Starting from the Right Place?
EFRAG and CNC invite comments, which are due by March 18, 2007.

XVII World Congress of Accountants

The World Congress of Accountants met in Istanbul, Turkey from November 13 to 16, 2006. The theme of the second plenary session was capital market stability worldwide and the accounting profession. Sir David Tweedie (Chairman, IASB) explained why global accounting standards, based on principles and promoting the appropriate use of professional judgment are vital to an efficient global capital market. He suggested three simple tests for a good quality accounting standard: Can we explain the standard in one minute? Does it make intuitive sense? Is it written in plain English? He stressed that the accounting profession had a “once in a lifetime” opportunity to retrieve accounting standards from rule-based systems, but this will require: restraint on the part of preparers and auditors from demanding interpretations and detailed implementation guidance; and acceptance by regulators that the exercise of judgment in a principles-based environment will mean that two entities in similar circumstances might get different accounting answers. To learn more, visit the World Congress of Accountants website.

US and Japan discuss global convergence

Representatives of the United States Financial Accounting Standards Board (FASB) and the Accounting Standards Board of Japan (ASBJ) met in Norwalk, CT, USA on November 2, 2006. This was the second meeting (following the meeting in May), to enhance dialogue between the two Boards in their pursuit of global convergence of accounting standards. For more information, refer to the press release.

ICAEW study on measurement in financial reporting

The Institute of Chartered Accountants in England and Wales has published a study on Measurement in Financial Reporting. It examines various measurement bases currently being used and concludes that there is not one basis that is the best for all items in all circumstances. The report states that the “Evaluation of options” should include the option to do nothing. Once the costs of potential changes (including the costs of making the change) have been taken into account and their likely benefits considered, it may become clear that the most sensible policy is to leave things as they are.