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									A monthly handout of Research Department, ICMAP                                                 (Issue no. 55) – December 2010
   This Update by the ‘Research Department’ of the Institute of Cost and Management Accountants of Pakistan aims at keeping our
   members, both practicing and employed, abreast with the developments taking place globally and nationally in the areas of
   management accounting, International Accounting Standards (IASs), International Financial Reporting Standards (IFRSs), exposure
   drafts issued by IFAC, IASB, SAFA etc as well as the policy changes made by regulating agencies in Pakistan.

IASB Exposure Draft on Hedge Accounting                                 IASB publishes IFRS Practice Statement
The International Accounting Standards Board (IASB) has
                                                                        on “Management Commentary”
issued an exposure draft on accounting for hedging activities.
The exposure draft proposes requirements designed to enable             The International Accounting Standards Board (IASB) has
companies to better reflect their risk management activities in         issued an International Financial Reporting Standard (IFRS)
their financial statements, and, in turn, help investors to             Practice Statement on ‘Management Commentary’, a
understand the effect of those activities on future cash flows.         broad, non-binding framework for the presentation of
The exposure draft forms part of the IASB’s overall project to          narrative reporting to accompany financial statements
replace IAS 39 - Financial Instruments: Recognition and                 prepared in accordance with IFRSs. Management
Measurement, and after confirmation of its proposals, they              commentary     outlines    management's    explanation    of
will be incorporated into IFRS 9 - Financial Instruments.               company’s financial position and any change thereof, results
                                                                        of operations and causes of changes in material line items.
The model for hedge accounting proposed in exposure draft is            Many entities see management commentary as an important
principle-based, and designed to more closely align hedge               element of their communication with the capital markets,
accounting with risk management activities, undertaken by               supplementing/ complementing financial statements.
companies when hedging their financial and non-financial
risk exposures. It addresses risk management issue of timing            The Practice Statement is not an IFRS, and as such the
of recognition of gains and losses. The model proposes a                entities applying IFRSs are not required to comply with the
comprehensive set of new disclosures that focus on the risks            Practice Statement, unless specifically required by their
being hedged, how those risks are being managed and the                 jurisdiction (country). Furthermore, non-compliance with the
effect of hedging those risks upon the primary financial                Practice Statement will not prevent an entity's financial
statements. The IASB intends to finalise and issue the                  statements from complying with IFRSs, if it otherwise do so.
proposals during the first half of 2011. The deadline for               An entity may apply the Practice Statement to management
submitting comments on exposure draft is 9th March 2011.                commentary presented prospectively from 8th December
To download exposure draft, please log on to www.ifrs.org               2010. For details, please visit website: www.ifrs.org

FASB issues a proposed Update to improve IPSASB issues 2010 improvements to Int’l
accounting for Repurchase Agreements     Public Sector Accounting Standards
The Financial Accounting Standards Board (FASB) has
released a Proposed Accounting Standards Update, on                     The International Public Sector Accounting Standards Board
Transfers and Servicing (Topic 860): Reconsideration of Effective       (IPSASB) has released Improvements to IPSASs – 2010,
Control for Repurchase Agreements. The ASU proposes                     which amend existing International Public Sector Accounting
amendments to remove from the assessment of effective                   Standards (IPSASs). The amendments relate primarily to
control the criterion relating to the transferor's ability to           requirements for recognition, measurement, and disclosure.
repurchase or redeem financial assets on substantially agreed           They do not represent substantive revisions to the content of
terms, even in the event of default by the transferee. If               existing standards. The amendments have two parts; Part 1
finalized, this proposal would improve convergence with IFRSs,          consists of amendments drawn from IASB document on
which do not contain a requirement to consider a transferor's           ‘Improvements to IFRSs’ issued in April 2009, whereas
ability to repurchase or redeem financial assets transferred on         Part 2 includes amendments relating to inconsistent
substantially agreed terms. The deadline for sending                    references to standards, terminology and structure resulting
comments to FASB is 15th January 2011. For more details,                from IPSASB's general review of existing IPSASs. The
please visit the FASB website: www.fasb.org                             amendments apply from 1st January 2012. For further
                                                                        details, please log on to website: www.ifac.org/publications

                            Research Department, Institute of Cost and Management Accountants of Pakistan
                               ICMAP Building, Street-18/C, ICMAP Avenue, Block-6, Gulshan-e-Iqbal, Karachi-75300
                         Tel: 021-99243900 Fax: 021-99243342 Email: research@icmap.com.pk Website: www.icmap.com.pk
IAESB issues proposed revision of IES-7 on                          ICWAI Draft Guidance Note on Cost
Continuing Professional Development (CPD)                           Accounting Standard on Material Cost
The International Accounting Education Standards Board              The Institute of Cost and Works Accountants of India
(IAESB) of IFAC has issued for public exposure a proposed           (ICWAI) has issued the Initial Draft of “Guidance Note on
revision of International Education Standard (IES) 7-               Cost Accounting Standard-6 on Material Cost (CAS-6)”.
Continuing Professional Development: A Program of                   The Guidance Note has been drafted by the Cost
Lifelong Learning and Continuing Development of                     Accounting Standard Board of the institute. ICWAI has
Professional Competence. This exposure draft is the first in a      asked comments from its members on the said draft latest
series of planned revisions over the coming year, and aimed to      by 31st December 2010. The proposed initial draft shall be
clarify CPD obligations through the revision of IES 7. It is also   modified in light of comments received before being
intended to draw international attention to pre-qualification       forwarded to the Cost Accounting Standard Board for
education for accounting professionals and the competencies of      consideration. To study and download the draft
an auditor through revisions of additional standards.               guidance note, please log on to website: www.icwai.org

IES 7, drafted in 2004, introduces the concepts of continuing       CIPFA- NAO form alliance to improve
                                                                    public sector audit in developing world
professional development (CPD) learning that develops and
maintains competence to enable professional accountants to
perform their roles effectively. The proposed redrafting aims to
assist the ongoing worldwide development of CPD systems and         The Chartered Institute of Public Finance and
compliance mechanisms. IAESB expects to increase the                Accountancy (CIPFA) and the National Audit Office (NAO)
opportunity for mobility of labor, and in so doing contribute to    of UK have formed a new partnership aimed at improving
the global economy through these revision efforts.                  support for public sector audit in the developing world.
                                                                    The alliance draws on the NAO’s experience of conducting
The deadline for comments is 8th March 2010. For more details       high quality financial and value-for-money audits,
please click www.ifac.org/Education/ExposureDrafts.php.             developing the skills to manage audit offices and
                                                                    strengthening links with parliaments.
APEC Economic Policy Report 2010 suggests                           CIPFA’s main focus will be building on its existing
‘diversity in Accounting Standards’                                 international course provision to train the staff in Supreme
                                                                    Audit Institutions (SAIs), particularly in developing
The Asia-Pacific Economic Cooperation forum (APEC) has              countries, to improve the quality of public service delivery,
released its 2010 Economic Policy Report, which discusses           leading to better money value for international aid, more
various corporate governance matters, including international       transparent accounting processes and accurate and
harmonization of accounting standards. It acknowledges the          comprehensive accounts. By helping strengthen national
benefits of IFRS and suggests possibility of maintaining            institutions in this way, CIPFA and the NAO aim to make
'diversity' in accounting standards, or permitting choice. This     it easier for international donors to honour their
stance is quite different to the direction of the G20, which more   commitments to use country systems to manage and
strongly favors convergence of accounting standards.                oversee international aid. For further details about CIPFA
                                                                    and NAO, please visit their respective websites at:
APEC is an inter-governmental organisation with 21 member           http://www.cipfa.org.uk/ and http://www.nao.org.uk/
economies in the Asia-Pacific region, including Australia,
Canada, The People's Republic of China, Japan and the United
States. For more information, please visit website: www.apec.org    SECP Guides for Investors Education
SECP extends CRS and CEES till 31 December                          The Securities and Exchange Commission Pakistan has
                                                                    published a series of guide booklets under its Investor
The Securities and Exchange Commission of Pakistan (SECP)           Education Programme (IEP. The Booklets cover the
has extended the Companies Regularization Scheme (CRS)              insurance sector, Modarbas, Voluntary Pension Funds,
and Companies Easy Exit Scheme (CEES) to 31st December              registration of companies, real estate investments trusts
2010. These schemes were initially operative from July to           (REITs) and stock market. These Guides provide Investors’
September 2010, which were extended twice on public demand.         insight into the capital market and its players, investors’
On further demand for extension from corporate consultants,         rights and responsibilities, key features of investment
associations and relevant quarters, the SECP has now extended       products available in market, SECP’s role as the apex
it upto 31st December, 2010. The fees structure in terms of         regulator and avenues for redress available to investors in
S.R.O. 996(I)/2010 of October 26, 2010 shall be applicable.         case their rights are infringed.
According to SECP, this is the last extension and any requests
for further extension shall not be granted. For further             To download the booklets, please visit the SECP website:
information, please log on to www.secp.gov.pk                       www.secp.gov.pk under the link of ‘Investor Education’.

                                              Research Department, ICMAP

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