American Institute of Certified Public Accountants and Chartered Institute of Management Accountants agree to offer new CGMA designation

New AICPA-CIMA designation -- Chartered Global Management Accountant -- to advance knowledge and practice of management accounting worldwide
LONDON / WASHINGTON, DC (May 23, 2011) – The governing bodies of the American Institute of Certified Public Accountants and the Chartered Institute of Management Accountants, headquartered in London, today agreed on creation of a new professional designation, the Chartered Global Management Accountant, that will be a worldwide standard of professional excellence in management accounting.
With approval now given by the AICPA and CIMA councils, the two accounting bodies will create the new CGMA designation to give management accountancy a higher profile in the United States and promote the professional development of management accountants across the globe. Backing the new CGMA designation will be an AICPA-CIMA joint venture with international resources and experience in management accounting, business and cultural knowledge.
CIMA president George Glass said: 'We are delighted that management accountancy is to be given a strong new global impetus by this joint venture. This advances our strategic aims and will ensure management accountants, committed to strict ethical standards, will receive world-class support in a fast-globalising world.'
'This is truly an historic moment for management accounting and the accounting profession worldwide.' AICPA chairman Paul Stahlin said. 'Our joint venture with CIMA creates long-term strategic value for our members and literally opens up the world for US CPAs in management accounting.'
CIMA is the largest professional body in the world focused exclusively on management accounting and the AICPA is the world’s largest professional accounting organisation with members in a wide range of accounting and financial executive roles. Together, the new venture will cover more than 550,000 members and students worldwide.
The new AICPA and CIMA joint venture will promote and establish the CGMA as the preeminent, globally recognised management accounting designation. The joint venture will combine the strength of the AICPA in North America with CIMA’s presence in Europe, the Middle East, Africa, Asia and elsewhere.
CIMA chief executive Charles Tilley said: 'The new CGMA will be recognised throughout the world as the gold-standard designation for management accountants who play a vital role in building sustainable business value. The joint venture will raise the profile of the profession and be a passport for careers throughout the world.'
'Economic globalisation is a reality for all businesses now and in the future and so it’s critical that we have a universally accepted standard of excellence for management accounting,' said AICPA president and CEO Barry Melancon. 'Combining that commitment to excellence with ethics and integrity, the CGMA will help produce and recognise top management accounting professionals worldwide.'
It is proposed that the new CGMA letters will be issued to members early in 2012. AICPA voting members with at least three years working in management accounting or a financial management role would qualify for an accelerated route to obtaining the new designation. Those holding the new designation will commit to a programme of developing and maintaining competency in management accounting as well as leadership and strategy.
This knowledge base will be derived from an expert-panel assessment of skills and competencies needed to succeed in various career paths in management accounting. CIMA members, all of whom hold either an ACMA or FCMA, will be entitled to use the letters ACMA CGMA or FCMA CGMA if they wish to. The new CGMA will be issued by the AICPA and CIMA through a license with the joint venture, with membership remaining with the existing organisations.
The AICPA and CIMA had announced their proposal to form a joint venture on March 28, 2011.
For press enquiries please contact:
CIMA Victor Smart Director of profile and communications +44 (0)20 8849 2254 victor.smart@cimaglobal.com
AICPA William Roberts Director media relations + 01 202 434 9266 wroberts@aicpa.org
Notes to Editors 1. The Chartered Institute of Management Accountants, founded in 1919, is the world’s leading and largest professional body of Management Accountants, with 183,000 members and students operating in 168 countries, working at the heart of business.
CIMA members and students work in industry, commerce, the public sector and not-for-profit organisations. CIMA works closely with employers and sponsors leading-edge research, constantly updating its qualification, professional experience requirements and continuing professional development to ensure it remains the employers’ choice when recruiting financially-trained business leaders.
CIMA is committed to upholding the highest ethical and professional standards of members and students, and to maintaining public confidence in management accountancy. CIMA is proud to be the first professional accounting body to offer a truly global product in the fast-moving area of Islamic Finance. According to independent research conducted by the University of Bath School of Management, CIMA’s syllabus and examination structure are the most relevant to the needs of business of all the accountancy bodies assessed. See the CIMA Difference report for further information at www.cimaglobal.com/cimadifference. For more information about CIMA, please visit http://www.cimaglobal.com/ Follow us on Twitter at www.twitter.com/CIMA_News 2.
The American Institute of Certified Public Accountants (www.aicpa.org), founded in 1887, is the world’s largest association representing the accounting profession, with nearly 370,000 members in 128 countries.
AICPA members represent many areas of practice, including business and industry, public practice, government, education, and consulting; membership is also available to accounting students and CPA candidates. The AICPA sets ethical standards for the profession and U.S. auditing standards for audits of private companies, non-profit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination. The AICPA maintains offices in New York, Washington, DC, Durham, N.C., Ewing, N.J. and Lewisville, Texas. Media representatives are invited to visit the AICPA Press Center at www.aicpa.org/press. Follow us on Twitter at www.twitter.com/AICPANews.

Masters in Accounting - Great USA site by Mark Macaluso

Masters in Accounting was created as a nonprofit resource to serve students considering enrolling in a masters in accounting program. Actively maintained, Masters in Accounting is the only nonprofit website which lists and links to every accredited masters in accounting program as well as answers some basic questions about the degree so that students have a single unbiased resource from which they can begin their research.


About Us

Who and Why?

Masters in Accounting was created by Mark Macaluso in June 2010. Mark, a MSA graduate, decided to create Masters in Accounting because despite the fact that you can find almost anything online, there were to-date no reliable nonprofit websites devoted to presenting prospective students with an understanding of what a masters in accounting program entails, which schools offer the degree, what differences exist between various masters in accounting programs and sub-specialities, etc.

Contact

Feedback is always welcomed. While I generally try not to give advice about specific schools and programs in an attempt to remain unbiased, I will be happy to answer questions relating to other aspects of the degree, career options, etc. So please don’t hesitate to email me, Mark Macaluso, at: info #at# mastersinaccounting #dot# net.

IFAC: Crisis shows need for global standards...

The financial crisis has only highlighted the need for a single set of global accounting standards, it has been claimed.

In its 2008 annual report, the International Federation of Accountants (IFAC) describes how its core work on developing international guidance and rules has become even more relevant during the global recession.

Ian Ball, chief executive officer of the IFAC, said: "As a result of the crisis, some of the ideas IFAC has been communicating for decades are resonating with greater force."

"Chief among these is the need for convergence to global standards."

The report also includes details of the actions taken by the IFAC in a range of areas, and compares the outcomes to the original goals set out by the body.

Recently, John Smith, a member of the International Accounting Standards Board, told the European Commission's Financial Reporting in a Changing World conference that the integrated nature of capital markets means a global set of accounting rules is vital to future economic stability.

To find out about achieving a balance between the needs of corporate governance and those of everyday business management, visit our Enterprise Governance page.

New Financial Architecture

From www.weforum.org On January 15, 2009, the World Economic Forum released its initial report from the New Financial Architecture project, “The Future of the Global Financial System: A Near-Term Outlook and Long-Term Scenarios.” The effort was mandated by the World Economic Forum’s investors and financial services communities in January 2008 to explore the driving forces that are shaping the global financial system and how these forces might affect governance and industry structure. Press release Project Steering Committee and executive summary of report (PDF 1.6 MB) Full report “The Future of the Global Financial System” (PDF 11.8 MB) Compendium - Driving Forces (PDF 1.7MB) Key conclusions from phase one report – “The Future of the Global Financial System” The phase one report identifies a near-term industry outlook characterized by an expanded scope for regulatory oversight, back to basics in the banking sector, some restructuring by alternative investment firms and the emergence of a new set of winners and losers. Over the long-term, a range of external forces and critical uncertainties will further shape the industry. In particular, our study found that the pace of power shifts from today’s advanced economies to the emerging world and the degree of international coordination on financial policy are the two most critical uncertainties for the future of the global financial system. The report therefore explores four challenging scenarios. Driving forces and critical uncertainties In phase one of the New Financial Architecture project, the World Economic Forum engaged more than 250 industry practitioners, policy-makers and academics in workshops, interviews and participation in a survey to identify and prioritize the key driving forces expected to shape the future of the global financial system between today and 2020. The engagement process resulted in an inventory of 34 prioritized driving forces (Figure 1). Figure 1: Survey results: prioritization of key driving forces on the future of wholesale financial markets The phase one long-term scenarios were developed using industry facts, figures and forecasts for key underlying driving forces, which are summarized in the following compendium: Key driving forces on the future of the wholesale financial markets Four scenarious for the future of the global financial system Financial regionalism is a world in which post-crisis blame-shifting and the threat of further economic contagion create three major blocs on trade and financial policy, forcing global companies to construct tripartite strategies to operate globally. Fragmented protectionism is a world characterized by division, conflict, currency controls and a race-to-the bottom dynamic that only serves to deepen the long-term effects of the financial crisis. Re-engineered Western-centrism is a highly coordinated and financially homogenous world that has yet to face up to the realities of shifting power and the dangers of regulating for the last crisis rather than the next. Rebalanced multilateralism is a world in which initial barriers to coordination and disagreement over effective risk management approaches are overcome in the context of rapidly shifting geo-economic power. Phase two priorities In phase two of the New Financial Architecture project, the World Economic Forum will work closely with industry stakeholders to delve deeper into the implications of this analysis, with the goal of exploring collaborative strategies and areas of systemic improvement. This will involve an examination of the potential future sources of systemic risk, as well as opportunities to reposition the industry for sustainable, long-term growth in ways that maximize the stability and prosperity of both the financial and real economies. Figure 2: Transition from phase one to phase two The World Economic Forum will be hosting workshops with key stakeholders throughout 2009 January 28 - February 1: Davos-Klosters, Switzerland March (TBC), London, United Kingdom May 14, Dead Sea, Jordan September 10, Dalian, China September (TBC), New York, United States For more information, please contact: Max von Bismarck, Director and Head of Investor Industries, max.vonbismarck@weforum.org Bernd Jan Sikken, Associate Director and Head of Emerging Markets Finance, berndjan.sikken@weforum.org Nicholas Davis, Associate Director, Scenario Planning, nicholas.davis@weforum.org

IFMA in Geneva

What is IFMA: Background

The Suisse Romande branch of the International Financial Management Association (IFMA) began life in 1973 as an affiliate of the Institute of Management Accountants (IMA) in the United States. The Association changed its name to IFMA in 1983 when it joined other European IMA chapters to recognize the international aspects of accounting and business, in which the European members are mostly interested.

The European affiliates continue to maintain their relationship with the IMA, sharing many of its goals and objectives. They also benefit from the IMA's worldwide organization, which was founded early in the 20th century and whose members today exceed 100,000

Accountants in Demand

THE humble accountant is in high demand. Despite the rising ranks of the unemployed, many companies still suffer from a shortage of skilled finance and accounting staff, according to a new survey of 4,800 hiring managers by Robert Half International, a recruiting firm. Fifty-six percent of respondents reported difficulty finding appropriate candidates for finance roles, with the most acute shortages reported in Hong Kong, Brazil and Japan. When compared to an identical poll last year, some of the largest jumps in frustrated recruiters were in continental Europe, namely France, Switzerland and the Netherlands. By contrast, companies in America are finding it easiest to hire skilled financial talent, perhaps reflecting the masses of qualified candidates cut loose from the country’s stricken financial services sector in recent months.

UK firms 'can share IFRS expertise' ...

Accounting firms in the UK could be given opportunities to share expertise with the US, according to one expert.

Mark Allison, chairman of the International Accounting Standards Board, has told Scotland on Sunday that expertise is needed to help firms in North America to switch to International Financial Reporting Standards (IFRS) as currently used in the UK.

Countries including the US, Canada and Mexico are set to transfer to IFRS from their local variations, with various deadlines set for the shift.

The moves are hoped to create an increase in consistency and transparency in international accounting.

Mr Allison said the fact that accounting firms in the UK will "share a common language and culture" with their US counterparts means that there could be opportunities to "provide expertise".

Robert Herz, chairman of the US Financial Accounting Standards Board, recently told Reuters that it could take a long time to implement IFRS in the US, claiming that it could result in more effort than is currently presumed.

Canada Confirms January 2011 as IFRS Start Date!

The Canadian Accounting Standards Board (AcSB) has re-confirmed the “go date” for IFRS Canada for “publicly accountable enterprises” . The date will be for years beginning on or after January 1, 2011 (don’t forget you will have to have an opening balance sheet and a comparative figures on an IFRS basis (2010 calendar for calendar year companies). It will be a very busy period up to the conversion date and especially busy if you have barely scratched the surface of converting to IFRS. Read more...

IFRS Implementation Around the World (2008)

The International Financial Reporting Standards (IFRS) is a single set of accounting standards developed by the IASB (International Accounting Standards Board). Public companies in at least 100 countries now prepare financial statements using IFRS. The map below shows the status of IFRS implementation around the world.

IFRS Implementation Around the World (2008)

IFRS is a less extensive body of literature than is U.S. GAAP. It does not include extensive industry-specific guidance and in many instances, IFRS contains similar concepts but does not contain the same amount of detailed implementation guidance as does U.S. GAAP.

Because of the less-detailed guidance, there are more circumstances where application of IFRS will require exercise of judgment, which will need to be supported by contemporaneous analysis. IFRS requires clear, transparent disclosures of critical accounting policies and estimates, particularly in areas requiring application of judgment.

SEC to Determine Next Steps

by Jeff Henson

Read more on Jeff's blogs:

• IFRSUSA.
• XBRLUSA.

The SEC is analyzing comments and determining its next move on IFRS. In the meantime, we would do well to stay IFRS aware and conduct a business impact assessment on how IFRS will affect our businesses. This would be a good time to determine how your financial statements will be impacted by IFRS and to learn more about the convergence project between the FASB and IASB.

The FASB & IASB have several topics on their convergence Agenda including:

• Financial Statement Presentation (Performance Reporting)
• IFRS 2 Share-based Payment Amendment – group cash-settled share-based payment transactions Impairment
• Income Taxes – Reconsideration of IAS 12
• Insurance Contracts – Phase II (Comprehensive Project)
• Joint Ventures – Reconsideration of IAS 31 Leases
• Liabilities (was part of Business Combinations – Phase II)
• Post-employment Benefits including Pensions
• Rate-regulated Activities
• Related Party Disclosures
• Revenue Recognition
• (IFRS for) Small and Medium-sized Entities (also referred to as Private Entities and Non-publicly Accountable Entities)
• Intangible Assets Extractive Activities IFRS XBRL Taxonomy
• Conceptual Framework Project Update
• Business Combinations Project Update
• Financial Statement Presentation
• Revenue Recognition Project Update

As a result of these and other initiatives, the FASB expects to make significant progress toward international convergence in the next few years. However, because of the volume of differences and the complex nature of some issues, the FASB anticipates that many differences between U.S. and international standards will persist.

The benefits of Islamic finance

Experts in Islamic finance believe their way of doing business has shielded them from the global credit crisis. Read original article.

• Information on the CIMA Certificate in Islamic Finance

But how does it differ from conventional Western finance?

A former executive director of the International Monetary Fund, Dr Abbas Mirakhor, says wider Islamic economics relies on God's guidance, handed down almost 1,400 years ago.

There is a "consciousness of a supreme creator and a system that he has provided", he says.

What we know as the conventional Western way does not have that, which is "really the major difference between the two", he adds.

In practical terms, the most significant difference is that charging interest is not allowed in Islamic finance.

FEATURES OF ISLAMIC ECONOMY Dealing in interest, liquor, pork, gambling or pornography are prohibited under Sharia law Islam forbids all forms of economic activity which it deems morally or socially harmful Individuals must spend their wealth judiciously and not hoard it, keep it idle or squander it Muslims have a duty to contribute a percentage of their wealth to deprived and poor sections of Muslim society

Neither are most forms of speculative investment permitted, such as hedging or derivatives trading.

"We don't recognise the concept of interest... to look for some profit from trading money," explains Dr Bambang Brodjonegoro from the Islamic Development Bank.

"In the Islamic concept, money is strictly for the purpose of exchange or storing value, but not for the transaction of looking for excessive profit," he says.

Sharing risks

How then, does an Islamic bank, and a customer who puts money in that bank, make a profit?

The Qur'an contains principles Muslims must follow when they do business

The system is asset-based, with tangible assets or commodities at the heart of it. There are buyers and sellers, not borrowers and lenders.

Here is a comparison.

In Los Angeles a customer who wants to borrow money to buy a car would go to a conventional bank and agree a loan. The bank would hand over the money.

There would be regular repayments, which include interest accrued on the loan.

In Lahore a customer could go to an Islamic bank and sign a contract with the bank to buy a car from them.

The bank would not loan the money but buy the car itself. Then it would sell it to the customer at a mark up.

The customer would agree to pay back the cost in instalments over a regular period.

One of the core principles at the heart of Islamic economics is risk sharing. The bank and the people who put their money in it share any profit, or loss, from investments.

"In Islam we appreciate merit, so if someone works harder in a business...they (the bank) will get the sharing benefit," explains Dr Brodjonegoro.

"The more important thing is that there will be no bank that rules everything. It will be bank and borrowers at the same level and they share the risk and benefit."

Alternative way

This sense of equality is important. It is one of the defining characteristics which proponents of Islamic economics say make it different from the conventional western way.

It is time for Islamic finance to pause and think of the direction it is taking Prof. Habib Ahmed, Islamic finance expert

Islamic economics also highlights a belief in benefitting the wider Muslim community.

The former IMF Executive Director Dr Mirakhor says that it chimes with "a movement toward becoming more 'other conscious'...having consciousness about the other fellow, about the general public interest."

This contrasts with what he described as the "simple narrow basis of self interest which motivates, supposedly, the economic agents in the liberal economic system."

Some see the Islamic model as an alternative. Others see it as complementary to the system which has dominated the western world.

"I don think that this Islamic banking system is the alternative, that we have one or the other. I think this is a complimentary service, a way of doing service," says Prof Ekmeleddin Ihsanoglu, Secretary General of the Organization of Islamic Countries.

"It needs to be an option there where people can find different ways of doing the same thing."

Compromising principles

Islamic economics is not the exclusive preserve of Muslims.

London is emerging as a major financial centre for Islamic finance. Islamic banking products are also widely used by non Muslims in Malaysia.

"This is an alternative system that can be applied to everybody. Everybody can use it regardless of their religion," says Dr Brodjonegoro from the Islamic Development Bank.

Major banks like Britain's HSBC and Citi of the US have set up Islamic banking subsidiaries that are flourishing. Some of the champions of the Islamic way want to see business expand beyond the natural market of Muslim countries.

They believe that now, more than ever, there is a market for non Muslims who share in the values espoused in Islamic economics.

But there are some who fear that by expanding the Islamic way is becoming less Islamic.

Time to reflect

"Unfortunately what is happening is that Islamic finance in some ways is moving more and more closely to the conventional finance," says Prof Habib Ahmed, a world authority on Islamic finance.

"If you look at the development in the past few years, Islamic finance appears to be mimicking most of the products of conventional finance."

There has never been a better time to champion an economic model which is different to the one laying in shreds on Wall Street, says Prof Ahmed. But he believes that the Islamic concept is being diluted.

"As people after this crisis are looking for solutions...the Islamic finance industry is moving towards that very system," he says.

"I think it is time for Islamic finance to pause and think of the direction it is taking".

IASB publishes fair value findings...

Fair value accounting guidance set out by the US Financial Accounting Standards Board (FASB) is consistent with that published by the International Accounting Standards Board (IASB). Read original article.

That is the conclusion of a review by the IASB aimed at ensuring consistency in the way such rules are applied.

Following the accelerated 30-day consultation on the issue, relevant guidance from the FASB's Staff Positions on fair value measurement will be included when the IASB publishes an exposure draft on the same subject next month.

Sir David Tweedie, IASB chairman, said: "We have heard a clear and consistent message on financial instruments accounting - fix this once, fix it comprehensively, and fix it in an urgent and responsible manner."

This is why the IASB has set out a six-month timetable for replacing current standards relating to the subject, he added.

Earlier this month, the FASB launched two draft proposals aimed at improving guidance relating to fair value measurement and impairments.

SEC IFRS Roadmap moves slowly and relentlessly forward

NEW YORK, April 27, 2009 – PricewaterhouseCoopers’ leading International Financial Reporting Standards (IFRS) experts will be discussing the most recent and important developments in the move to adopt international accounting standards in the United States in a live webcast tomorrow afternoon. The discussion will address the latest thinking on IFRS from regulators, standard setters and other constituents on the debate over when, and how, IFRS should be adopted for use by U.S. domestic registrants.

Beginning at 3:30 p.m. on Tuesday, April 28, the event will be a 75-minute live video webcast, including a Q&A session at the end. Read original article.

To register for the webcast, please go to http://www.meetpwc.com/rsvp/invitation/invitation.asp?id=/m2c53c-1RHZ5W5F6LNWI. Once you register, you will receive a confirmation email with a link and access instructions for joining the webcast.

The deadline expired Monday on the 150-day comment period for the SEC's "Road Map" to adoption of IFRS. Amid uncertainty in the U.S. and global economies, and notwithstanding concerns that have surfaced from a wide range of constituents about costs and timing, the drive toward creating a unified set of high-quality financial reporting standards continues to move forward.

According to a newly released PwC report, IFRS is already affecting U.S. companies independently of moves to eventually adopt IFRS in the United States. The impact will broaden considerably over the next few years as ongoing convergence of U.S. GAAP and IFRS brings key changes to U.S. financial reporting. Those changes will have numerous implications for U.S. businesses, most notably revenue recognition, leases, consolidations and pensions. In these areas, in particular, companies may need to rethink certain business operations, strategies and agreements as a result of convergence (ranging from sales staff compensation to compliance with certain debt covenant agreements).

Meanwhile, companies are already feeling the indirect effect of IFRS adoption by their foreign subsidiaries and counterparties, particularly in customer and vendor transactions. These two simultaneous movements—ongoing IFRS adoption around the globe and convergence in the United States—will bring near-constant change to US financial reporting for years to come.

The discussion, which will highlight PwC’s point of view, and what the Firm sees as the next steps the SEC will take in moving toward adopting IFRS in the US, will be moderated by the Firm’s US IFRS Practice Leader, John J. Barry. Also taking part will be:

• David B. Kaplan, PwC partner and leader of the International Accounting Consulting Services team;


• David Schmid, PwC partner and leader of U.S. Global Accounting and Consulting Services;


• Angie Blomberg, partner in the firm's Transaction Services practice and a leader in the firm's IFRS efforts in the financial services industry;


• Richard Fuchs, PwC partner and IFRS Steering Committee member with extensive experience in IFRS conversion during postings in Germany, London and Hong Kong.

IASB amends 12 standards

The International Accounting Standards Board (IASB) has made a range of amendments to 12 International Financial Reporting Standards (IFRSs). Read original article.

All the changes are part of the board's annual improvements project, which is used to make non-urgent adjustments to IFRSs.

The latest amendments reflect issues that were initially raised in proposals published in October 2007, August 2008 and January 2009.

• Print-friendly version of this press release [PDF]


• Annual Improvements project page


• IASB homepage

A spokesperson for the IASB said: "By presenting the amendments in a single document rather than as a series of piecemeal changes, the IASB aims to ease the burden of change for all concerned."

The changes are effective for annual periods beginning on or after January 1st 2010, unless otherwise specified, he added.

However, the IASB has decided to postpone reconsideration of two issues raised in the proposed changes of August 2008 due to comments received during the consultation period.

Recently, the board announced it is working on the proposals made by the leaders of the G20 nations at their meeting earlier this month.

To reveal, but not to regulate

IN PUBLIC, bankers have been blaming themselves for their troubles. Behind the scenes, they have been taking aim at someone else: the accounting standard-setters. Their rules, moan the banks, have forced them to report enormous losses, and it’s just not fair. These rules say they must value some assets at the price a third party would pay, not the price managers and regulators would like them to fetch. Unfortunately, banks’ lobbying now seems to be working. The details may be arcane, but the independence of standard-setters, essential to the proper functioning of capital markets, is being compromised. And, unless banks carry toxic assets at prices that attract buyers, reviving the banking system will be difficult. Read original article.

On April 2nd, after a bruising encounter with Congress, America’s Financial Accounting Standards Board (FASB) rushed through rule changes. These gave banks more freedom to use models to value illiquid assets and more flexibility in recognising losses on long-term assets in their income statements. Bob Herz, the FASB’s chairman, decried those who “impugn our motives”. Yet bank shares rose and the changes enhance what one lobbying group politely calls “the use of judgment by management”.

European ministers instantly demanded that the International Accounting Standards Board (IASB) do likewise. The IASB says it does not want to be “piecemeal”, but the pressure to fold when it completes its overhaul of rules later this year is strong. On April 1st Charlie McCreevy, a European commissioner, warned the IASB that it did “not live in a political vacuum” but “in the real world” and that Europe could yet develop different rules.

It was banks that were on the wrong planet, with accounts that vastly overvalued assets. Today they argue that market prices overstate losses, because they largely reflect the temporary illiquidity of markets, not the likely extent of bad debts. The truth will not be known for years. But banks’ shares trade below their book value, suggesting that investors are sceptical. And dead markets partly reflect the paralysis of banks which will not sell assets for fear of booking losses, yet are reluctant to buy all those supposed bargains.

To get the system working again, losses must be recognised and dealt with. Japan’s procrastination prolonged its crisis. America’s new plan to buy up toxic assets will not work unless banks mark assets to levels which buyers find attractive. Successful markets require independent and even combative standard-setters. The FASB and IASB have been exactly that, cleaning up rules on stock options and pensions, for example, against hostility from special interests. But by appeasing critics now they are inviting pressure to make more concessions.

Standard-setters should defuse the argument by making clear that their job is not to regulate banks but to force them to reveal information. The banks, their capital-adequacy regulators and politicians seem to dream of a single, grown-up version of the truth, which enhances financial stability. Investors and accountants, however, think all valuations are subjective, doubt managers’ motives and judge that market prices are the least-bad option. They are right. A bank’s solvency is a matter of judgment for its regulators and for investors, not whatever a piece of paper signed by its auditors says it is. Accounts can inform that decision, but not make it.

Banks’ regulators have to take responsibility. If they want to remove the mechanical link between drops in market prices and capital shortfalls at banks, they should take the accounts that standard-setters create for investors and adjust them when they calculate capital. They already do this to some degree. But the banks’ campaign to change the rules is making inevitable a split between two sets of accounts, one for regulators and another for investors. The FASB and IASB can help regulators to create whatever balance-sheet they want. But in doing so they must not compromise their duty to investors.

US firms see opportunities in IFRS switchover...

US companies see adopting International Financial Reporting Standards (IFRS) as a chance to make improvements to the way they operate, according to a new survey. Read original article.

A study by Accenture found that 83 per cent of executives at US companies with a listed value of $1 billion (£680 million) believe the changeover from US Generally Accepted Accounting Principles to IFRS will present them with a chance to make changes in their finance functions.

Dan London, managing director of Accenture's finance and performance management practice, said: "Those companies that view the conversion as an opportunity to upgrade their performance management capabilities, addressing compliance and risk management, as well as increasing operational efficiencies, are better positioned to drive value from the process."

However, firms should start preparing for the switchover now to make sure they are well placed to deal with any issues arising, he added.

Last year, the US Securities and Exchange Commission issued a roadmap for the transition to IFRS which could see the rules adopted by 2014.

IASB to improve derecognition requirements ...

The International Accounting Standards Board (IASB) has published a draft proposal aimed at improving the derecognition requirements for financial instruments. Read original article.

Derecognition occurs when an entity needs to remove an instrument from its financial statements.

The IASB is also proposing to enhance disclosure requirements in situations where a firm still has an ongoing involvement with an asset that has been removed from its statements in such a manner.

Sir David Tweedie, chairman of the IASB, explained that the use of special structures by banks to manage complex securitisation arrangements had brought this matter to the fore.

He said: "Financial structures have become increasingly complex and sophisticated, creating the need for improved ways of assessing whether an entity should derecognise assets or not."

The crisis also underlined the need for users of financial statements to have access to better information about off balance sheet risks, he added.

Recently, the IASB updated its fair value standards to bring them more closely into line with their US equivalents.

Diploma in IFRS Results

The results from the February 2008 sitting of the ICAI Diploma in International Financial Reporting Standards (IFRS) exam have just been published. In total 42 participants sat and were successful in the February exam, with over 60% receiving Distinctions.

The ICAI congratulates the following people:

• Martin Barry
• Clare Bourke
• Michelle Carroll
• JJ Comerford
• Margaret Deehan
• Niamh Fee
• Elizabeth Gildea
• Aidan Gorman
• Anna Kurchenko
• Colm Malone
• Garrett McCarthy
• Una McGuinness
• Brendan Molloy
• Thomas Murphy
• Margaret O'Neill
• Hugh O'Neill
• Bronagh Quigley
• Aisling Reenan
• Theresa Ryan
• Nicola Walsh
• Brian Gallagher
• Damian Gleeson
• Noel Gleeson
• Shane McKenna
• Denise O'Connell
• Lucy O'Connell
• Lisa Ryan
• Michelle Walshe
• Lauren Allman
• Andrea Flanagan
• Darren Harty
• Noel McLaughlin
• Erling Mitton
• Derval Molloy
• Liz Murphy
• Gerard John O'Gorman
• Adeline Smyth
• Paul Summers
• Niall Sweeney
• Michael Harty
• Sarah Williams
• Lynne Martin

To receive more information about the next session of the IFRS Diploma email ifrs@icai.ie

Off-balance sheet standards to be harmonised...

International accounting standards which deal with off-balance sheet activity are to be harmonised in response to the financial crisis, it has been revealed. Read original article.

The International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) announced the move following their latest meeting into the impact of the global recession.

Furthermore, the two boards are also set to work on analysing loan loss accounting within the financial instruments project.

Sir David Tweedie, chairman of the ISAB, explained that the fact that harmonising international accounting standards is such a complicated business is also what makes it necessary.

He said: "That is why in important areas such as financial instruments a common standard that significantly improves financial reporting and leads to a less complex approach is required. The path to achieving convergence will undoubtedly be challenging but the remit we have from policymakers is clear."

Earlier this month, the FASB issued two new proposals to improve guidance on fair value measurements and impairments.

The IASB has since asked for views on these submissions to see if it should adopt them as well.

Cost savings on IFRS conversion?

From Accounting Principles

In response to the economic crisis and continued regulatory uncertainty surrounding IFRS, 71% of companies are slowing their implementation efforts, specifically holding off allocating staff to the project, or postponing their accounting differences diagnostics. However, companies need to ensure that these cuts do not compromise their long-term plans, and must use 2009 for low-cost, targeted assessment and preparation activities.

Waiting Game:
In the last few months, companies have been slowing-but not suspending-their IFRS implementation efforts. This is manifested in two key areas – companies have avoided ramping up their overall project teams, either by cutting back on their budgets, or by holding off allocating staff. At the same time firms are postponing accounting and IT diagnostics, or conducting them internally instead of using more costly consultants as initially planned.

Other Things on the Plate:

There are two main reasons for this slowdown:
Regulatory Uncertainty: Companies are holding back because of the uncertainty surrounding the IFRS Roadmap; including conflicting comments by senior policymakers about whether the SEC will continue ‘full speed ahead’ towards adoption, and strong dissatisfaction with having to wait until 2011 for the ‘go/no-go’ decision. This should be temporary, and will probably go away when the administration’s intentions become clearer, but as of now, companies are scared of committing to an expensive, company-wide set of changes, only to revert back because of policy shifts.

The Economic Crisis:

Companies have much more immediate spending needs than IFRS – currency exchange issues, higher pension costs, and other ‘distractions’ all crowd out increasingly scarce dollars, and are making it difficult for companies to justify spending for an IFRS transition that may not happen until 2014.

Don’t Cut Back Too Far:
While cutting back on IFRS may be an attractive option, companies need to be wary of stopping their IFRS efforts altogether. IFRS is a long term process, and even with the current uncertainty, companies must lay the groundwork in 2009 for the ongoing project in targeted, low-cost ways, including:

Conducting preliminary IFRS accounting research:

As IFRS standards are still being written, conducting highly detailed accounting diagnostics may be counterproductive at this stage. However, companies should dedicate an individual to track and evaluate IASB standards as part of their job, determine which ones are in flux, and which are stable, and use publicly-available and Roundtable resources to understand the key differences. This allows you to prioritize your future workplans.

Evaluate your organization for IFRS competency: Even if you don’t plan to form your project team yet, use 2009 to evaluate your company for people with good project management skills (including ‘big project’ experience in SOX or an ERP implementation), as well as those who have practical IFRS experience, perhaps through a foreign subsidiary. Determine whether you will be able to move these people onto your team, and determine any competency gaps that might need to be filled by outside consultants.

Start reaching out to key stakeholders:

IFRS will have a broad impact on corporate functions, and you need to start making stakeholders aware of IFRS. Start letting IT know you may need to change your General Ledger and other systems (and make sure you are in their long-term work plans), and inform legal and treasury about any debt covenants and contracts that mention US GAAP terms, and may need to be changed.

The key is not to commit to expensive changes – the external environment may not give you that flexibility, and many of the detailed changes are unknowable at this point anyway-but to get an understanding of the specific challenges you face, so that you will be in a good position to start detailed planning when its appropriate.