Financial Reporting zone

Financial reporting briefs: August 2007

Frustrated at the continued growth of missing trader intra-community VAT fraud, Belgium’s federal police are looking to recruit 43 accountants and bookkeepers to help even the odds in fight against financial crime.

The selected accountants will undergo a 15 month training programme before being assigned to branch (training for London’s Metropolitan police lasts only 31 weeks).

“We assume these people can gain better insight into the VAT carousel, catch on more quickly as to how embezzlers work, and analyse accounts better than ordinary detectives,” said Eddy Dhont, federal police management co-ordinator. “In this way they can provide a great deal of help to other investigators who have more police experience, but less financial background.”

16 August - Nexia SC merger sees new name in global top 10

The boards of Nexia International and SC International have announced a merger agreement, making the combined group the ninth largest audit and advisory business in the world.

The new group will be known as Nexia International, and will have a turnover of $2.2 billion, with 559 offices in 97 countries and a workforce of over 23,000. Completion date for the merger is expected to be 1 December.

Commenting on the merger, Nexia chairman Gareth Pearce described SC International as a “strong fit”, and that its global presence was especially welcome. SC’s area of operations include the US, where it owns J H Cohn, the largest independent accounting firm in New York, and Europe, most notably Germany, the Netherlands, Switzerland and Russia.

A founder member of SC International, the UK firm Saffery Champness recently recorded increased fee income of 13.3% on the previous year, making it the 16th largest in the UK.

9 August - Smaller entities should ditch IFRS, says ICAS

The Institute of Chartered Accountants in Scotland (ICAS) has publicly opposed the Accounting Standards Board’s (ASB) proposed International Financial Reporting Standard (IFRS) for small and medium companies.

The standard is lengthy, complex, and unsuitable, says ICAS, who suggest smaller businesses should continue to use the Financial Reporting Standard for Smaller Entities (FRSSE) instead.

In effect, this mean ICAS is advocating a three-tiered reporting structure. Listed entities would use full IFRS, unlisted and non-publicly accountable entities would use IFRSS for SMEs, and small entities would remain with FRSSE.

“The draft IFRS for SMEs does not provide a suitable basis for the preparation of accounts for small companies due to the complexity and associated costs,” said ICAS director of accounting James Barbour. “A three tier financial reporting structure would be in the best interests of UK business for the time being.”

1 August – APB issues draft guidance on audit of investment businesses

The Auditing Practices Board has published a consultation draft of Practice Note (PN) 21, “The Audit of Investment Businesses in the United Kingdom”. The draft has been revised once already, so the consultation period has been shortened to two months, ending on 30 Septembter. The APB intends to finalise the PN by the end of the year.

The current PN21 was issued in 2000, and has since been supplemented by two bulletins, one specifically addressing audit risk and fraud. The first revision incorporated these bulletins, and reflected the replacement of Statements of Auditing Standards with ISAs, but impending changes to law and FSA rule necessitated a second draft, the APB said.

“It also includes new guidance on reporting on controls over client assets”, said Richard Fleck, APB chairman.

The APB welcomes comments on the draft from “auditors and others with an interest in investment business.” The draft can be found here.

Previous financial reporting briefs:

July 2007

Number of comments: 1

iain nicolson, 9-Aug-2007

with the exeption of maybe on
only a handful of IFRs becoming adopted instead eg pensions as these are as rule of thumb investments in the stock markets in anycase !

another one been Goodwill simply because there many different ways in which people already arrive at its valuation and it would be nice to have just one recognised standard due to the very nature of this item