News

The IASB has issued proposals to simplify the calculation of Earnings Per Share (EPS) by eliminating differences between methods required by IFRSs and US accounting standards to calculate the same. Measures proposed to achieve this convergence are: providing a clear principle to determine which instruments should be included in the EPS calculation; clarifying the EPS calculation for particular instruments, such as contracts to sell or repurchase an entity’s own shares and participating instruments; and simplifying the EPS calculation for instruments that are accounted for at fair value through profit or loss.

Tagged: finance investment

An analysis by Compliance Week has revealed that the number of material weaknesses reported by large companies have reduced in the past two years. Compliance Week reviewed the internal control disclosures revealed by more than 400 companies in the S&P 500 in 2007. It found that only 11 companies had disclosed a total of 14 material weaknesses as compared to 900 material weaknesses disclosed by hundreds of companies in 2006. This improvement has demonstrated the evidence that Section 404 of Sarbanes-Oxley has helped companies’ internal control over financial reporting.

Tagged: finance investment

The European Commission has taken a decision to grant transitional period for the registration requirements for audit firms from 30 non-EU countries. The decision will grant these 30 third country audit firms a transitional period until 1 July 2010 as they conduct their audit activities for third country companies listed in European market. However, the transition will only be granted to firms that comply with the minimum information requirements necessary for investors in Europe. The decision also clarifies the how the competent authorities in Member States should deal with third country audit firms under the Statutory Audit Directive.

Tagged: finance investment

The IMF Board’s 2008 Article IV Consultation on Euro Area Policies has revealed that the Euro area has shown a relative robustness to global shocks, but is expected to slow down due to rising inflation, financial conditions, slowing of global demand and appreciation exchange rate of the Euro. Some of the observations made by the Board are: need for monetary policy that can balance the risk of increase in inflation by building dis-inflationary forces; need for large parts of the services sector to be opened to EU-wide competition, though the past and ongoing structural reforms have brought successful results; and need for alignment of national financial stability frameworks with the EU's commonly agreed principles for crisis prevention, management, and resolution. The Board also reported that the fiscal-frame offered by the Stability and Growth Pact had helped improve fiscal discipline in the Euro area.

Tagged: finance investment

The SEC advisory Committee has submitted their final report, containing recommendations for improving financial reporting for investors, to SEC Chairman Christopher Cox. The five main areas on which the report provides practical proposals are: increasing the usefulness of information in SEC filings; enhancing the accounting standards-setting process; improving the substantive design of new standards; delineating authoritative interpretive guidance; and clarifying guidance on financial restatements and accounting judgements.

Tagged: finance investment

The OECD Working Party on Private Pensions has drafted guidelines to help pension regulators and supervisory authorities improve pension fund governance. The guidelines cover the issues on the need for balanced representation of stakeholders in pension fund boards, greater expertise and knowledge among board members, and risk-based governance structures and mechanisms. The OECD has welcomed public comments on this draft until 1 October 2008.

Tagged: governance

Lawyers and business executives are warning that global M&A deals could be impeded by new anti-trust laws that will come into affect this week writes the Financial Times. From Friday, companies will have to notify Chinese enforcement agencies about planned deals that meet filing thresholds. They will then have to await clearance before proceeding. Many feel however that the thresholds are set too low and that there will be limited resource and experience to deal with such matters quickly. In India regulators can have up to 210 days to assess merger filings.

The IASB has issued "Eligible Hedged Items", an amendment to IAS 39 Financial Instruments: Recognition and Measurement, clarifying the implementation of the existing principles of hedge accounting while designating a hedged item. An exposure draft published in September 2007 indicated that diversity in the practice of designation existed or could exist in the designation of: a one-sided risk in a hedged item and inflation in a financial hedged item. The guidance illustrates how existing principles of hedge accounting should be applied in these situations. The amendment will be applicable for annual periods starting on or after 1 July 2009.

Tagged: finance investment

The EU has published two consultation documents on Credit Rating Agencies (CRAs); first, related to the conditions for authorisation, operation and supervision of CRAs and second, proposing policy options to tackle excessive reliance on ratings in EU legislation. For efficient oversight of EU over CRAs, the consultation document proposes two options. The first option is based on a reinforced co-ordination role for the Committee of European Securities Regulators (CESR) and strong regulatory co-operation between national regulators; while the second option would combine the establishment of a European Agency for the EU-wide registration of CRAs and the reliance on national regulators for the supervision of CRA activities.

Tagged: finance investment, governance

The SEC has issued guidelines for public companies to help them conform to securities laws while developing the investor relations sections of their websites. The guidance, issued in the form of an interpretive release, handles issues on how information posted on a company web site can be considered "public" and provides guidance to help companies comply with public disclosure requirements under Regulation FD. The guidance also clarifies that information posted on company Web sites need not comply with Sarbanes-Oxley.

Tagged: finance investment