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newsletter 4 - Tasmanian Audit Office - Accountability on Your Behalf

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newsletter 4 - Tasmanian Audit Office - Accountability on Your Behalf

     ISSUE 2007/4 December 2007 ACCOUNTING & AUDITING ISSUE 2007/4 December 2007 ACCOUNTING & AUDITING

    PAGE 1 DEVELOPMENTS NEWSLETTER PAGE 1 DEVELOPMENTS NEWSLETTER

     ACCOUNTING AND AUDITING DEVELOPMENTS

     Issue 2007/4

    December 2007

CONTENTS

    1 ACCOUNTING UPDATE

    3 ETHICAL UPDATE

    4 INTERNATIONAL

    UPDATE

    5 MISCELLANEOUS

    PUBLICATIONS

    6 ACRONYMS AND

    ABBREVIATIONS

    7 COPIES OF REPORTS

    AND PUBLICATIONS ACCOUNTING UPDATE 7 CONTACTS

    7 ACKNOWLEDGEMENTS Australian Accounting Standards Board (AASB)

    meeting 16 November 2007

    At its meeting, the AASB discussed the following matters:

    Review of AAS 27, AAS 29 and AAS 31

    The AASB has made almost all substantive decisions on the

    proposals in ED 156 ‘Proposals arising from the Short-term Review

    of the Requirements of AAS 27, AAS 29 and AAS 31’. The Board is

    expected to vote on the following Standards out of session: The Tasmanian Audit Office

    Ground floor ? AASB 1050 ‘Administered Items’

    144 Macquarie Street ? AASB 1052 ‘Disaggregated Disclosures’

    Hobart, Tasmania, 7000 ? revised AASB 1004 ‘Contributions’ Telephone: (03) 6226 0100 ? AASB 2007-9 ‘Amendments to Australian Accounting Fax: Fax: (03) 6226 0199 Standards arising from the Review of AAS 27, AAS 29 and

    Website: www.audit.tas.gov.au AAS 31’.

    The Board has also decided to amend AASB 1051 ‘Land Under

    Roads’ and Interpretation 1038 ‘Contributions by Owners Made to

    Wholly-Owned Public Sector Entities’.

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    Not-for-profit entity definition

    The Board plans to issue an Invitation to Comment on this matter by year end. It will be based upon New Zealand’s definition and guidance on public benefit entities.

    GAAP/GFS harmonisation

    The Board considered whether GAAP/GFS harmonisation principles should apply to entities within

    the General Government Sector, such as Departments. The Board will consult further with certain constituents before discussing the GAAP/GFS harmonisation project with the Financial Reporting

    Council.

The Board noted that the Australian Bureau of Statistics is considering making some amendments to

    its GFS Manual. Some of these amendments are expected to reduce GAAP/GFS convergence

    differences. The amendments are expected to have minimal impact upon AASB 1049 ‘Whole of

    Government and General Government Sector Financial Reporting’.

Service concession arrangements

    The Service Concessions Advisory Panel is in the process of developing recommendations about an

    Interpretation dealing with accounting by public sector grantors.

The Board noted that the International Public Sector Accounting Standards Board is expected to

    issue a Consultation Paper on service concession arrangements shortly. Business combinations

    The Board considered a process for determining the suitability of draft revised AASB 3 ‘Business

    Combinations’ for combinations of not-for-profit entities. They determined that inclusion of Aus paragraphs was not appropriate at this stage, but that the Board will consider the matter prior to

    the application date of AASB 3.

    Franked dividends

    The Board published a proposed agenda rejection statement and related issue proposal about the recognition of franked dividend revenue on its website www.aasb.com.au. Comments were requested by 3 December 2007. The Board will consider these comments at its December meeting.

    The Board received a presentation on suggestions about the disclosure of franking credits. Customer contributions

    The International Financial reporting Interpretations Committee (IFRIC) is considering customer

    contributions. Should the IFRIC issue an Interpretation, the AASB will consider its impact upon UIG

    Interpretation 1017 ‘Developer and Customer Contributions for Connection to a Price-Regulated Network’.

Source: AASB Action Alert 109, 16 November 2007.

    AASB Interpretation

    The AASB has issued an Interpretation on Australian Petroleum Resource Rent Tax (PRRT). AASB

    Interpretation 1003 requires that PRRT is treated as an income tax. The Interpretation applies to

    annual reporting periods ending on or after 30 June 2008.

Source: AASB Media Release, 22 November 2007.

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ETHICA L UPDATE

     Australian Professional and Ethical Standards Board (APESB)

     Review of exposure drafts

     The Board considered responses to the exposure draft of ED 03/07 ‘Network Firm Definition’ at its November meeting. After some further minor redrafting, this Standard is expected to be released and will be effective for assurance periods commencing on or after 1 July 2008.

     At the same meeting, the Board considered responses to ED 05/07 ‘Conformity with Accounting

    Standards’. It will also be issued as a Standard a fter minor redrafting. Its operative date will be 1 July

    2008.

     In addition, the Board considered responses to ED 04/07 ‘Terms of Engagements’. Again, after minor redrafting, this will be issued as a Standard. The operative date will also be 1 July 2008.

     Upcoming exposure drafts

    The Board is currently working on:

     ? ED 0X/07 ‘Business Valuation’

     ? ED 0X/07 ‘Compilation of Financial Reports’ (former APS 9).

     Annual review of existing standards

     A consolidation of APES 110 ‘Code of Ethics for Professional Accountants’ incorporating the network firm definition and amendments to the Corporations Act 2001 is expected in February 2008.

     Amendments to APES 320 ‘Quality Control for Firms’ will be delayed until the release of ISQC 1

    ‘Quality Control for Firms that perform Audits and Reviews of Financial Statements and Other

    Assurance and Related Service Engagements’. APES 410 ‘Conformity with Auditing and Assurance Standards’ will be reallocated to the ‘300 series’ applicable to members in public practice. Source: APESB meeting highlights, 20 November 2007.

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INTERNATIONAL UPDATE

     International Accounting Standards Board (IASB)

     Meeting 13-16 November 2007

    At this meeting, the IASB discussed:

     ? a revenue recognition model that proposes recognition of revenue based on increases and

     decreases in contract assets and liabilities

     ? the process for dealing with accounting by policy holders for their rights under insurance contracts

     ? responses to the exposure draft ‘State-controlled Entities and the Definition of a Related Party’, which proposed amendments to IAS 24 ‘Related Party Disclosures’. The Board made some tentative decisions and will continue consideration of issues at a future meeting ? possible approaches for finalising the amendments to IFRS 2 ‘Share-based Payment’ set out in ‘Vesting Conditions and Cancellations’

    ? the content of an initial discussion document on presentation of cash flow information.

     The Board also:

     ? received an update on IFRIC activities ? changed the effective date of the revised IFRS 3 ‘Business Combinations’ and amended IAS 27 ‘Consolidated and Separate Financial Statements’ to 1 July 2009, with early adoption permitted ? had an education session with IASB staff on the staff’s approach to developing a discussion paper on consolidations

    ? discussed fair value measurements, the conceptual framework, puttable financial instruments

    and obligations arising on liquidation. Source: IASB Update, November 2007.

     Corrections and other changes to IAS 1 ‘Presentation of Financial Statements’

     The IASB has made editorial changes and to IAS 1 as published on 6 September 2007. Further details of these changes are available in the document ‘IASB Editorial Changes List 22 November 2007’ available from the IASB’s website: www.iasb.org.

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    MISCELLANEOUS PUBLICATIONS

     Australian Capital Territory Auditor-General’s Office

     ? The Aged Care Assessment Program and the Home and Community Care Program

     This publication is available at www.audit.act.gov.au.

Australian National Audit Office

     ? Performance Audit of the Regional Partners Programme ? Administration of Australian Business Number Registrations Follow-up Audit ? Data Integrity in the Child Support Agency ? Panel Discussion: CPA Congress: Performance Audit Reports (Speech)

    These publications are available at www.anao.gov.au.

     Queensland Audit Office

     ? Auditor-General of Queensland Report to Parliament No. 8 for 2007: South East Queensland -

    Towards a Short-Term Water Balance

    ? Auditor-General of Queensland Report to Parliament No. 9 for 2007: Results of Audits as at 31

    October 2007

     These publications are available at www.qao.qld.gov.au.

NSW Audit Office

     ? Auditor-General's Report to Parliament 2007 Volume Six ? Police Rostering ? Auditor-General's Report to Parliament 2007 Volume Five ? Improving Efficiency of Irrigation Water Use on Farms

    These publications are available at www.audit.nsw.gov.au.

     Victorian Auditor-General’s Office

     ? Parliamentary Appropriations: Output Measures

     ? Audits of two major ‘Partnerships Victoria’ projects

     ? Discovering Bendigo project

     ? Auditor-General’s Report on Annual Financial Report of the State of Victoria, 2006-07 These publications are available at www.audit.vic.gov.au.

     South Australian Auditor-General’s Department

    ? Report of the Auditor-General for the year ended 30 June 2007 - Supplementary Report: Agency Audit Reports

    This publication is available at www.audit.sa.gov.au.

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     ACRONYMS AND ABBREVIATIONS

     AAS Australian Accounting Standards

AASB Australian Accounting Standards Board

     AIFRS/AEIFRS Australian Equivalents to International Financial Reporting Standards

     APRA Australian Prudential Regulation Authority

ASA Australian Auditing Standard

     ASIC Australian Securities and Investments Commission

     AUASB Auditing and Assurance Standards Board

ED Exposure Draft

     FASB Financial Accounting Standards Board (USA)

     GAAP Generally Accepted Accounting Principles

     GFS Government Finance Statistics

GGS General Government Sector

     GPFR General Purpose Financial Report

     IAASB International Auditing and Assurance Standards Board

IAS International Accounting Standard

     IASB International Accounting Standards Board

     IFAC International Federation of Accountants

     IFRIC International Financial Reporting Interpretations Committee

IFRS International Financial Reporting Standards

     IPSASB International Public Sector Accounting Standards Board

     ISA International Standards on Auditing

ISQC International Standards on Quality Control

     PCAOB Public Company Accounting Oversight Board

     UIG Urgent Issues Group

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     COPIES OF REPORTS AND PUBLICATIONS

     Tasmanian Audit Office reports are available on the office’s web site at www.audit.tas.gov.au.

    Publications of the Australian Auditing and Assurance Standards Board (AUASB) including auditing

    and assurance standards, guidance statements, other guidance and exposure drafts are available direct from the AUASB as follows:

    Australian Auditing and Assurance Standards Board

    Phone: (03) 8080 7400 Fax: (03) 8080 7450 Postal Address: PO BOX 204 Collins Street West, Victoria 8007 Website: www.auasb.gov.au.

    Publications of the Australian Accounting Standards Board (AASB), including Accounting Standards and Exposure Drafts are available direct from the AASB as follows:

    Phone: (03) 9617 7600

    Fax: (03) 9617 7608 Postal Address: PO BOX 204 Collins Street West, Victoria 8007 Website: www.aasb.com.au

    Copies of International Federation of Accountants (IFAC) publications may be obtained direct from

    IFAC, 535 Fifth Avenue, 14th Floor, New York, NY 10017, USA (tel 212/286.9344 or fax 212/286.9570 or by visiting the IFAC web site at www.ifac.org.

    Copies of International Accounting Standards, Exposure Drafts and International Accounting

    Standards Board (IASB) publications may be obtained direct from the IASB, 30 Cannon Street,

    London EC4M 6XH, United Kingdom (tel +44 (020) 7332-2730 or fax +44 (020) 7332-2749 or email publications@iasb.org or Internet www.iasb.org).

     CONTACTS

For matters arising in this Newsletter

     The Deputy Auditor General and / or the relevant Managers are usually your first point of contact

     for the application of financial audit queries on the general office number (03) 6226 0100.

     Deputy Auditor-General Ric De Santi ric.desanti@audit.tas.gov.au Manager, Financial Audit Neville I’Anson neville.ianson@audit.tas.gov.au Manager, Financial Audit Jeff Tongs Jeff.Tongs@audit.tas.gov.au

     Manager, Quality Assurance Rob Luciani Rob.Luciani@audit.tas.gov.au

     The Director of Performance Audit may be contacted for performance or compliance audit queries on the general office number (03) 6226 0100.

Director, Performance Audit Geoff Driscoll geoff.driscoll@audit.tas.gov.au

     The Tasmanian Audit Office postal address is GPO Box 851, Hobart, TAS, 7001.

     ACKNOWLEDGEMENTS This Newsletter is of a general nature only and is not intended to be a substitute for or relied upon as The Tasmanian Audit Office specific professional advice. No responsibility for loss gratefully acknowledges the Audit occasioned to any person acting on or refraining from Office of NSW for permitting us to action as a result of any material in the publication use material from its Awareness can be accepted. newsletter.

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