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Gholamhossein DavaniMember of New York State Society of Certified Public
Accountants(NYSSCPA)Member of Iranian Association of Certified Public
Accountants(IACPA)November 2009
What is IFRS
What is IFRSIFRS is a set of established accounting
standards that is rapidly gaining worldwide acceptance
Standards are promulgated by the London-based International Accounting Standards Board (IASB)ndashIASB includes representatives from major countries including the US
Generally more focused on objectives and principles and less reliant on detailed rules and interpretations than US GAAPndashIFRS currently consists of a single volume of approximately 40 standards and 25 interpretations Standards include IASs and IFRSs Interpretations include SICs and IFRICs
The Big Picture
A new perspective on financial reporting ndashFocus on ldquotransparencyrdquo of financial information versus uniformity of practices
General movement toward global standardsndashGrowing consensus among regulators and standard setters on need for global standardsConsensus on the use of a ldquoprinciple-basedrdquo approach
Shift in how standards are developed written and appliedndashWill involve a new way of thinking about accounting and financial reportingReducing complexity and simplifying standards
The Global Move Towards IFRS
Europe2005
Australia 2005
Canada200911
South Africa2005
United States (2011)
Current or anticipated requirement or option to use IFRS (or equivalent)
Brazil2010
China 2007
India 2011
Chile 2009
Japan()
IFRS Today and TomorrowToday IFRS is used
in over 100 countries Required across all EU countries
starting in 2005 Argentina Brazil Canada and
India have announced mandated use
Ongoing convergence efforts between FASB and IASB
By 2014 it is expected that All major countries will have
adopted IFRS to some extent China and Japan will be
substantially converged to IFRS US public companies will begin
to be required to use IFRS
196187
117
0
50
100
150
200
250
2006
US GAAP IFRS Other
Accounting Standards Used by Global Fortune 500
Global IFRS reporting trends
IFRSDrivers
bull Enhances transparencycomparabilitybull Eases flow of capital globally thus
possible reduction in cost of capitalbull Facilitates accounting and reporting
bull IFRS quickly picking up share of Global F500 companies 203
268
29
183
113
204
0
50
100
150
200
250
300
2004 2007
US GAAP
Other
IFRS
Recent Regulatory Developments
SEC Concept Release on allowing US issuers a choice between IFRS and US GAAP
Elimination of US GAAP reconciliation for Foreign Private Issuers using IFRS
FASB panel discussion of US moving to IFRSEncouragement from stakeholders for the SEC
to set a definitive timeline for conversion to IFRSSEC IFRS Roundtable ndashAugust 2008 Discussion on performance of IFRS and US GAAP during
credit crisis Consensus that IFRS held up well if not better than US
GAAP Fair value still remains a challenge under both standards
Discussion on areas where continued convergence is needed
Recent Regulatory Developments
1048707SEC Proposing Release sets the stage for possible mandatory adoption of IFRS by US issuers beginning with fiscal years ending after December 15 2014 for large accelerated filers
1048707Roadmap contains certain milestones to be achievedndashSEC Commission to review milestone progress in 2011 before issuing a final rule for mandatory adoption
1048707Proposed rule to permit certain US issuers the option to use IFRS for fiscal years ending after December 15 2009ndashThree years of financial statements must be presentedndashIssuers must be in the top 20 companies in their industry
based on market capitalization andtheir industry peer groupmustpredominantly report under IFRS
US GAAP ndash IFRS ConvergenceConvergence is to be achieved through
Formal liaison relationshipsMonitoring of FASB and IASB major projectsShort-term convergence projectsJoint projects
Ongoing Convergence Efforts
IASB and FASB reaffirm convergence effortsUpdating of the ldquoNorwalk Agreementrdquo
Focus is on the process and converging general principlesLess focus on converging details
Involves several projectsldquoShort-termrdquo convergence projects Joint conceptual framework projectsOther Joint convergence projectsOther IASB projects
Future prospects
Recent FASBIASB StandardsldquoHigh Levelrdquo Convergence
Description FASB Issuances IASB Issuances
Share-based payments
FAS 123R IFRS 2
Business combinations
FAS 141R IFRS 3 (2008)
Goodwill and other intangible assets
FAS 142 IAS 36 and IAS 38
Long-lived assets held for sale and discontinued operations
FAS 144 IFRS 5
Fair value option and measurement guidance
FAS 155 FAS 157 and FAS 159
IAS 39
Even though these were joint projects key differences still remain
US GAAP ndash IFRS Convergence ndash Where are we now
Boards have achieved ldquohigh-levelrdquo convergence in some areasExamples include income taxes business
combinations share-based payments etcOther areas models are very different
Examples include debtequity classification de-recognition consolidation etc
US GAAP ndash IFRS Convergence ndash Where are we now
A study of 130 reconciliations from foreign filers using IFRS in 2006 showed the differences between the two accounting systems can be quite largeApprox 23 of the companies showed higher
earnings under IFRSOnly two companies in the study showed the
same earnings under both IFRS and US GAAP
US GAAP ndash IFRS Convergence ndash Where are we now
Impact to EquitySlightly more than half of the cos Showed
greater equity under IFRS1 company had the same equity
The following areas contributed significantly to the differencesDeferred taxes PPampE pensions minority
interest capitalization of interest purchase price accounting and asset impairment
First Time Adoption of IFRS
Terminology Differences IFRS US GAAP
Shares Stock Stock Inventory Reserves Equity Associate Investee
Provision Accrual True and fair Presents fairly
Overview of IFRS 1
Applicable when an entity makes its first explicit and unreserved reference to IFRSGenerally apply retrospectively all IFRS effective at
reporting dateCertain exemptions can be electedSome exceptions that must be followed
Requires one year of comparative financial information
Transition adjustments recognized in retained earnings
Must explain effect of transition to IFRS
ScopeAn entity is a ldquofirst-time adopterrdquo if the most
previous financial statements were prepared In conformity with IFRS in all respects except that
an explicit and unreserved statement of compliance was not presented
Stating compliance with some but not all of IFRSWith a reconciliation of some amounts to IFRSOn an IFRS basis for internal use only
Terms to Remember
1048707First IFRS financial statementsndashFirst annual financial statements in which an ldquoexplicit and unreservedrdquo reference to compliance with IFRS
1048707Date of transition to IFRSndashBeginning of the earliest comparable period presented in an entityrsquos first IFRS financial statements
1048707Reporting datendashThe end of the latest period covered by financial statements or by an interim financial report
Compliance with IFRS
Compliance with IFRS includesAll active standards (IASs and IFRSs)All active interpretations (SICs and IFRICs)IFRS requires presentation of comparative
periodMust make explicit and unreserved statement
of compliance
The Good the Bad and the Ugly
The goodndashYou know more about IFRS than you think Many areas are similar to US GAAP
The badndashThere are significant areas of difference New way of thinking about standards
Just plain uglyndashThere has been historically lax practices in applying IFRS (ldquoIFRS literdquo)
Overview of Key ConceptsConcept DiscussionAccounting policies Specific principles bases
conventions rules and practices
Estimates Adjustments in the carrying amount of assets or liabilities
Result from new information or developments
Errors Material omissions or misstatements in financial statements
Include clerical errors mistakes in application oversight or misinterpretation of facts fraud
Material Omissions or misstatements that individually or collectively influence
the economic decisions of usersConsider the size and nature of the
item
IFRS Accounting Policies ndash IAS 8
IAS 8 established ldquohierarchyrdquo when choosing IFRS accounting policies
1Apply any specific IFRS consider any relevant implementation guidance
2Refer to other IFRSs dealing with similar or related issues
3IFRS Framework4Consider pronouncement of other standard-
setting bodies or industry practices if consistent with the above steps
Consistency of Accounting Policies ndash IAS 8
If one or more alternative methods are available
Choose and apply one method for the consolidated entity For all transactionitems or
If expressly permitted for all transactionsitems etc in a category of items
If expressly permitted on a transaction by transaction basis
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
What is IFRSIFRS is a set of established accounting
standards that is rapidly gaining worldwide acceptance
Standards are promulgated by the London-based International Accounting Standards Board (IASB)ndashIASB includes representatives from major countries including the US
Generally more focused on objectives and principles and less reliant on detailed rules and interpretations than US GAAPndashIFRS currently consists of a single volume of approximately 40 standards and 25 interpretations Standards include IASs and IFRSs Interpretations include SICs and IFRICs
The Big Picture
A new perspective on financial reporting ndashFocus on ldquotransparencyrdquo of financial information versus uniformity of practices
General movement toward global standardsndashGrowing consensus among regulators and standard setters on need for global standardsConsensus on the use of a ldquoprinciple-basedrdquo approach
Shift in how standards are developed written and appliedndashWill involve a new way of thinking about accounting and financial reportingReducing complexity and simplifying standards
The Global Move Towards IFRS
Europe2005
Australia 2005
Canada200911
South Africa2005
United States (2011)
Current or anticipated requirement or option to use IFRS (or equivalent)
Brazil2010
China 2007
India 2011
Chile 2009
Japan()
IFRS Today and TomorrowToday IFRS is used
in over 100 countries Required across all EU countries
starting in 2005 Argentina Brazil Canada and
India have announced mandated use
Ongoing convergence efforts between FASB and IASB
By 2014 it is expected that All major countries will have
adopted IFRS to some extent China and Japan will be
substantially converged to IFRS US public companies will begin
to be required to use IFRS
196187
117
0
50
100
150
200
250
2006
US GAAP IFRS Other
Accounting Standards Used by Global Fortune 500
Global IFRS reporting trends
IFRSDrivers
bull Enhances transparencycomparabilitybull Eases flow of capital globally thus
possible reduction in cost of capitalbull Facilitates accounting and reporting
bull IFRS quickly picking up share of Global F500 companies 203
268
29
183
113
204
0
50
100
150
200
250
300
2004 2007
US GAAP
Other
IFRS
Recent Regulatory Developments
SEC Concept Release on allowing US issuers a choice between IFRS and US GAAP
Elimination of US GAAP reconciliation for Foreign Private Issuers using IFRS
FASB panel discussion of US moving to IFRSEncouragement from stakeholders for the SEC
to set a definitive timeline for conversion to IFRSSEC IFRS Roundtable ndashAugust 2008 Discussion on performance of IFRS and US GAAP during
credit crisis Consensus that IFRS held up well if not better than US
GAAP Fair value still remains a challenge under both standards
Discussion on areas where continued convergence is needed
Recent Regulatory Developments
1048707SEC Proposing Release sets the stage for possible mandatory adoption of IFRS by US issuers beginning with fiscal years ending after December 15 2014 for large accelerated filers
1048707Roadmap contains certain milestones to be achievedndashSEC Commission to review milestone progress in 2011 before issuing a final rule for mandatory adoption
1048707Proposed rule to permit certain US issuers the option to use IFRS for fiscal years ending after December 15 2009ndashThree years of financial statements must be presentedndashIssuers must be in the top 20 companies in their industry
based on market capitalization andtheir industry peer groupmustpredominantly report under IFRS
US GAAP ndash IFRS ConvergenceConvergence is to be achieved through
Formal liaison relationshipsMonitoring of FASB and IASB major projectsShort-term convergence projectsJoint projects
Ongoing Convergence Efforts
IASB and FASB reaffirm convergence effortsUpdating of the ldquoNorwalk Agreementrdquo
Focus is on the process and converging general principlesLess focus on converging details
Involves several projectsldquoShort-termrdquo convergence projects Joint conceptual framework projectsOther Joint convergence projectsOther IASB projects
Future prospects
Recent FASBIASB StandardsldquoHigh Levelrdquo Convergence
Description FASB Issuances IASB Issuances
Share-based payments
FAS 123R IFRS 2
Business combinations
FAS 141R IFRS 3 (2008)
Goodwill and other intangible assets
FAS 142 IAS 36 and IAS 38
Long-lived assets held for sale and discontinued operations
FAS 144 IFRS 5
Fair value option and measurement guidance
FAS 155 FAS 157 and FAS 159
IAS 39
Even though these were joint projects key differences still remain
US GAAP ndash IFRS Convergence ndash Where are we now
Boards have achieved ldquohigh-levelrdquo convergence in some areasExamples include income taxes business
combinations share-based payments etcOther areas models are very different
Examples include debtequity classification de-recognition consolidation etc
US GAAP ndash IFRS Convergence ndash Where are we now
A study of 130 reconciliations from foreign filers using IFRS in 2006 showed the differences between the two accounting systems can be quite largeApprox 23 of the companies showed higher
earnings under IFRSOnly two companies in the study showed the
same earnings under both IFRS and US GAAP
US GAAP ndash IFRS Convergence ndash Where are we now
Impact to EquitySlightly more than half of the cos Showed
greater equity under IFRS1 company had the same equity
The following areas contributed significantly to the differencesDeferred taxes PPampE pensions minority
interest capitalization of interest purchase price accounting and asset impairment
First Time Adoption of IFRS
Terminology Differences IFRS US GAAP
Shares Stock Stock Inventory Reserves Equity Associate Investee
Provision Accrual True and fair Presents fairly
Overview of IFRS 1
Applicable when an entity makes its first explicit and unreserved reference to IFRSGenerally apply retrospectively all IFRS effective at
reporting dateCertain exemptions can be electedSome exceptions that must be followed
Requires one year of comparative financial information
Transition adjustments recognized in retained earnings
Must explain effect of transition to IFRS
ScopeAn entity is a ldquofirst-time adopterrdquo if the most
previous financial statements were prepared In conformity with IFRS in all respects except that
an explicit and unreserved statement of compliance was not presented
Stating compliance with some but not all of IFRSWith a reconciliation of some amounts to IFRSOn an IFRS basis for internal use only
Terms to Remember
1048707First IFRS financial statementsndashFirst annual financial statements in which an ldquoexplicit and unreservedrdquo reference to compliance with IFRS
1048707Date of transition to IFRSndashBeginning of the earliest comparable period presented in an entityrsquos first IFRS financial statements
1048707Reporting datendashThe end of the latest period covered by financial statements or by an interim financial report
Compliance with IFRS
Compliance with IFRS includesAll active standards (IASs and IFRSs)All active interpretations (SICs and IFRICs)IFRS requires presentation of comparative
periodMust make explicit and unreserved statement
of compliance
The Good the Bad and the Ugly
The goodndashYou know more about IFRS than you think Many areas are similar to US GAAP
The badndashThere are significant areas of difference New way of thinking about standards
Just plain uglyndashThere has been historically lax practices in applying IFRS (ldquoIFRS literdquo)
Overview of Key ConceptsConcept DiscussionAccounting policies Specific principles bases
conventions rules and practices
Estimates Adjustments in the carrying amount of assets or liabilities
Result from new information or developments
Errors Material omissions or misstatements in financial statements
Include clerical errors mistakes in application oversight or misinterpretation of facts fraud
Material Omissions or misstatements that individually or collectively influence
the economic decisions of usersConsider the size and nature of the
item
IFRS Accounting Policies ndash IAS 8
IAS 8 established ldquohierarchyrdquo when choosing IFRS accounting policies
1Apply any specific IFRS consider any relevant implementation guidance
2Refer to other IFRSs dealing with similar or related issues
3IFRS Framework4Consider pronouncement of other standard-
setting bodies or industry practices if consistent with the above steps
Consistency of Accounting Policies ndash IAS 8
If one or more alternative methods are available
Choose and apply one method for the consolidated entity For all transactionitems or
If expressly permitted for all transactionsitems etc in a category of items
If expressly permitted on a transaction by transaction basis
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
The Big Picture
A new perspective on financial reporting ndashFocus on ldquotransparencyrdquo of financial information versus uniformity of practices
General movement toward global standardsndashGrowing consensus among regulators and standard setters on need for global standardsConsensus on the use of a ldquoprinciple-basedrdquo approach
Shift in how standards are developed written and appliedndashWill involve a new way of thinking about accounting and financial reportingReducing complexity and simplifying standards
The Global Move Towards IFRS
Europe2005
Australia 2005
Canada200911
South Africa2005
United States (2011)
Current or anticipated requirement or option to use IFRS (or equivalent)
Brazil2010
China 2007
India 2011
Chile 2009
Japan()
IFRS Today and TomorrowToday IFRS is used
in over 100 countries Required across all EU countries
starting in 2005 Argentina Brazil Canada and
India have announced mandated use
Ongoing convergence efforts between FASB and IASB
By 2014 it is expected that All major countries will have
adopted IFRS to some extent China and Japan will be
substantially converged to IFRS US public companies will begin
to be required to use IFRS
196187
117
0
50
100
150
200
250
2006
US GAAP IFRS Other
Accounting Standards Used by Global Fortune 500
Global IFRS reporting trends
IFRSDrivers
bull Enhances transparencycomparabilitybull Eases flow of capital globally thus
possible reduction in cost of capitalbull Facilitates accounting and reporting
bull IFRS quickly picking up share of Global F500 companies 203
268
29
183
113
204
0
50
100
150
200
250
300
2004 2007
US GAAP
Other
IFRS
Recent Regulatory Developments
SEC Concept Release on allowing US issuers a choice between IFRS and US GAAP
Elimination of US GAAP reconciliation for Foreign Private Issuers using IFRS
FASB panel discussion of US moving to IFRSEncouragement from stakeholders for the SEC
to set a definitive timeline for conversion to IFRSSEC IFRS Roundtable ndashAugust 2008 Discussion on performance of IFRS and US GAAP during
credit crisis Consensus that IFRS held up well if not better than US
GAAP Fair value still remains a challenge under both standards
Discussion on areas where continued convergence is needed
Recent Regulatory Developments
1048707SEC Proposing Release sets the stage for possible mandatory adoption of IFRS by US issuers beginning with fiscal years ending after December 15 2014 for large accelerated filers
1048707Roadmap contains certain milestones to be achievedndashSEC Commission to review milestone progress in 2011 before issuing a final rule for mandatory adoption
1048707Proposed rule to permit certain US issuers the option to use IFRS for fiscal years ending after December 15 2009ndashThree years of financial statements must be presentedndashIssuers must be in the top 20 companies in their industry
based on market capitalization andtheir industry peer groupmustpredominantly report under IFRS
US GAAP ndash IFRS ConvergenceConvergence is to be achieved through
Formal liaison relationshipsMonitoring of FASB and IASB major projectsShort-term convergence projectsJoint projects
Ongoing Convergence Efforts
IASB and FASB reaffirm convergence effortsUpdating of the ldquoNorwalk Agreementrdquo
Focus is on the process and converging general principlesLess focus on converging details
Involves several projectsldquoShort-termrdquo convergence projects Joint conceptual framework projectsOther Joint convergence projectsOther IASB projects
Future prospects
Recent FASBIASB StandardsldquoHigh Levelrdquo Convergence
Description FASB Issuances IASB Issuances
Share-based payments
FAS 123R IFRS 2
Business combinations
FAS 141R IFRS 3 (2008)
Goodwill and other intangible assets
FAS 142 IAS 36 and IAS 38
Long-lived assets held for sale and discontinued operations
FAS 144 IFRS 5
Fair value option and measurement guidance
FAS 155 FAS 157 and FAS 159
IAS 39
Even though these were joint projects key differences still remain
US GAAP ndash IFRS Convergence ndash Where are we now
Boards have achieved ldquohigh-levelrdquo convergence in some areasExamples include income taxes business
combinations share-based payments etcOther areas models are very different
Examples include debtequity classification de-recognition consolidation etc
US GAAP ndash IFRS Convergence ndash Where are we now
A study of 130 reconciliations from foreign filers using IFRS in 2006 showed the differences between the two accounting systems can be quite largeApprox 23 of the companies showed higher
earnings under IFRSOnly two companies in the study showed the
same earnings under both IFRS and US GAAP
US GAAP ndash IFRS Convergence ndash Where are we now
Impact to EquitySlightly more than half of the cos Showed
greater equity under IFRS1 company had the same equity
The following areas contributed significantly to the differencesDeferred taxes PPampE pensions minority
interest capitalization of interest purchase price accounting and asset impairment
First Time Adoption of IFRS
Terminology Differences IFRS US GAAP
Shares Stock Stock Inventory Reserves Equity Associate Investee
Provision Accrual True and fair Presents fairly
Overview of IFRS 1
Applicable when an entity makes its first explicit and unreserved reference to IFRSGenerally apply retrospectively all IFRS effective at
reporting dateCertain exemptions can be electedSome exceptions that must be followed
Requires one year of comparative financial information
Transition adjustments recognized in retained earnings
Must explain effect of transition to IFRS
ScopeAn entity is a ldquofirst-time adopterrdquo if the most
previous financial statements were prepared In conformity with IFRS in all respects except that
an explicit and unreserved statement of compliance was not presented
Stating compliance with some but not all of IFRSWith a reconciliation of some amounts to IFRSOn an IFRS basis for internal use only
Terms to Remember
1048707First IFRS financial statementsndashFirst annual financial statements in which an ldquoexplicit and unreservedrdquo reference to compliance with IFRS
1048707Date of transition to IFRSndashBeginning of the earliest comparable period presented in an entityrsquos first IFRS financial statements
1048707Reporting datendashThe end of the latest period covered by financial statements or by an interim financial report
Compliance with IFRS
Compliance with IFRS includesAll active standards (IASs and IFRSs)All active interpretations (SICs and IFRICs)IFRS requires presentation of comparative
periodMust make explicit and unreserved statement
of compliance
The Good the Bad and the Ugly
The goodndashYou know more about IFRS than you think Many areas are similar to US GAAP
The badndashThere are significant areas of difference New way of thinking about standards
Just plain uglyndashThere has been historically lax practices in applying IFRS (ldquoIFRS literdquo)
Overview of Key ConceptsConcept DiscussionAccounting policies Specific principles bases
conventions rules and practices
Estimates Adjustments in the carrying amount of assets or liabilities
Result from new information or developments
Errors Material omissions or misstatements in financial statements
Include clerical errors mistakes in application oversight or misinterpretation of facts fraud
Material Omissions or misstatements that individually or collectively influence
the economic decisions of usersConsider the size and nature of the
item
IFRS Accounting Policies ndash IAS 8
IAS 8 established ldquohierarchyrdquo when choosing IFRS accounting policies
1Apply any specific IFRS consider any relevant implementation guidance
2Refer to other IFRSs dealing with similar or related issues
3IFRS Framework4Consider pronouncement of other standard-
setting bodies or industry practices if consistent with the above steps
Consistency of Accounting Policies ndash IAS 8
If one or more alternative methods are available
Choose and apply one method for the consolidated entity For all transactionitems or
If expressly permitted for all transactionsitems etc in a category of items
If expressly permitted on a transaction by transaction basis
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
The Global Move Towards IFRS
Europe2005
Australia 2005
Canada200911
South Africa2005
United States (2011)
Current or anticipated requirement or option to use IFRS (or equivalent)
Brazil2010
China 2007
India 2011
Chile 2009
Japan()
IFRS Today and TomorrowToday IFRS is used
in over 100 countries Required across all EU countries
starting in 2005 Argentina Brazil Canada and
India have announced mandated use
Ongoing convergence efforts between FASB and IASB
By 2014 it is expected that All major countries will have
adopted IFRS to some extent China and Japan will be
substantially converged to IFRS US public companies will begin
to be required to use IFRS
196187
117
0
50
100
150
200
250
2006
US GAAP IFRS Other
Accounting Standards Used by Global Fortune 500
Global IFRS reporting trends
IFRSDrivers
bull Enhances transparencycomparabilitybull Eases flow of capital globally thus
possible reduction in cost of capitalbull Facilitates accounting and reporting
bull IFRS quickly picking up share of Global F500 companies 203
268
29
183
113
204
0
50
100
150
200
250
300
2004 2007
US GAAP
Other
IFRS
Recent Regulatory Developments
SEC Concept Release on allowing US issuers a choice between IFRS and US GAAP
Elimination of US GAAP reconciliation for Foreign Private Issuers using IFRS
FASB panel discussion of US moving to IFRSEncouragement from stakeholders for the SEC
to set a definitive timeline for conversion to IFRSSEC IFRS Roundtable ndashAugust 2008 Discussion on performance of IFRS and US GAAP during
credit crisis Consensus that IFRS held up well if not better than US
GAAP Fair value still remains a challenge under both standards
Discussion on areas where continued convergence is needed
Recent Regulatory Developments
1048707SEC Proposing Release sets the stage for possible mandatory adoption of IFRS by US issuers beginning with fiscal years ending after December 15 2014 for large accelerated filers
1048707Roadmap contains certain milestones to be achievedndashSEC Commission to review milestone progress in 2011 before issuing a final rule for mandatory adoption
1048707Proposed rule to permit certain US issuers the option to use IFRS for fiscal years ending after December 15 2009ndashThree years of financial statements must be presentedndashIssuers must be in the top 20 companies in their industry
based on market capitalization andtheir industry peer groupmustpredominantly report under IFRS
US GAAP ndash IFRS ConvergenceConvergence is to be achieved through
Formal liaison relationshipsMonitoring of FASB and IASB major projectsShort-term convergence projectsJoint projects
Ongoing Convergence Efforts
IASB and FASB reaffirm convergence effortsUpdating of the ldquoNorwalk Agreementrdquo
Focus is on the process and converging general principlesLess focus on converging details
Involves several projectsldquoShort-termrdquo convergence projects Joint conceptual framework projectsOther Joint convergence projectsOther IASB projects
Future prospects
Recent FASBIASB StandardsldquoHigh Levelrdquo Convergence
Description FASB Issuances IASB Issuances
Share-based payments
FAS 123R IFRS 2
Business combinations
FAS 141R IFRS 3 (2008)
Goodwill and other intangible assets
FAS 142 IAS 36 and IAS 38
Long-lived assets held for sale and discontinued operations
FAS 144 IFRS 5
Fair value option and measurement guidance
FAS 155 FAS 157 and FAS 159
IAS 39
Even though these were joint projects key differences still remain
US GAAP ndash IFRS Convergence ndash Where are we now
Boards have achieved ldquohigh-levelrdquo convergence in some areasExamples include income taxes business
combinations share-based payments etcOther areas models are very different
Examples include debtequity classification de-recognition consolidation etc
US GAAP ndash IFRS Convergence ndash Where are we now
A study of 130 reconciliations from foreign filers using IFRS in 2006 showed the differences between the two accounting systems can be quite largeApprox 23 of the companies showed higher
earnings under IFRSOnly two companies in the study showed the
same earnings under both IFRS and US GAAP
US GAAP ndash IFRS Convergence ndash Where are we now
Impact to EquitySlightly more than half of the cos Showed
greater equity under IFRS1 company had the same equity
The following areas contributed significantly to the differencesDeferred taxes PPampE pensions minority
interest capitalization of interest purchase price accounting and asset impairment
First Time Adoption of IFRS
Terminology Differences IFRS US GAAP
Shares Stock Stock Inventory Reserves Equity Associate Investee
Provision Accrual True and fair Presents fairly
Overview of IFRS 1
Applicable when an entity makes its first explicit and unreserved reference to IFRSGenerally apply retrospectively all IFRS effective at
reporting dateCertain exemptions can be electedSome exceptions that must be followed
Requires one year of comparative financial information
Transition adjustments recognized in retained earnings
Must explain effect of transition to IFRS
ScopeAn entity is a ldquofirst-time adopterrdquo if the most
previous financial statements were prepared In conformity with IFRS in all respects except that
an explicit and unreserved statement of compliance was not presented
Stating compliance with some but not all of IFRSWith a reconciliation of some amounts to IFRSOn an IFRS basis for internal use only
Terms to Remember
1048707First IFRS financial statementsndashFirst annual financial statements in which an ldquoexplicit and unreservedrdquo reference to compliance with IFRS
1048707Date of transition to IFRSndashBeginning of the earliest comparable period presented in an entityrsquos first IFRS financial statements
1048707Reporting datendashThe end of the latest period covered by financial statements or by an interim financial report
Compliance with IFRS
Compliance with IFRS includesAll active standards (IASs and IFRSs)All active interpretations (SICs and IFRICs)IFRS requires presentation of comparative
periodMust make explicit and unreserved statement
of compliance
The Good the Bad and the Ugly
The goodndashYou know more about IFRS than you think Many areas are similar to US GAAP
The badndashThere are significant areas of difference New way of thinking about standards
Just plain uglyndashThere has been historically lax practices in applying IFRS (ldquoIFRS literdquo)
Overview of Key ConceptsConcept DiscussionAccounting policies Specific principles bases
conventions rules and practices
Estimates Adjustments in the carrying amount of assets or liabilities
Result from new information or developments
Errors Material omissions or misstatements in financial statements
Include clerical errors mistakes in application oversight or misinterpretation of facts fraud
Material Omissions or misstatements that individually or collectively influence
the economic decisions of usersConsider the size and nature of the
item
IFRS Accounting Policies ndash IAS 8
IAS 8 established ldquohierarchyrdquo when choosing IFRS accounting policies
1Apply any specific IFRS consider any relevant implementation guidance
2Refer to other IFRSs dealing with similar or related issues
3IFRS Framework4Consider pronouncement of other standard-
setting bodies or industry practices if consistent with the above steps
Consistency of Accounting Policies ndash IAS 8
If one or more alternative methods are available
Choose and apply one method for the consolidated entity For all transactionitems or
If expressly permitted for all transactionsitems etc in a category of items
If expressly permitted on a transaction by transaction basis
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
IFRS Today and TomorrowToday IFRS is used
in over 100 countries Required across all EU countries
starting in 2005 Argentina Brazil Canada and
India have announced mandated use
Ongoing convergence efforts between FASB and IASB
By 2014 it is expected that All major countries will have
adopted IFRS to some extent China and Japan will be
substantially converged to IFRS US public companies will begin
to be required to use IFRS
196187
117
0
50
100
150
200
250
2006
US GAAP IFRS Other
Accounting Standards Used by Global Fortune 500
Global IFRS reporting trends
IFRSDrivers
bull Enhances transparencycomparabilitybull Eases flow of capital globally thus
possible reduction in cost of capitalbull Facilitates accounting and reporting
bull IFRS quickly picking up share of Global F500 companies 203
268
29
183
113
204
0
50
100
150
200
250
300
2004 2007
US GAAP
Other
IFRS
Recent Regulatory Developments
SEC Concept Release on allowing US issuers a choice between IFRS and US GAAP
Elimination of US GAAP reconciliation for Foreign Private Issuers using IFRS
FASB panel discussion of US moving to IFRSEncouragement from stakeholders for the SEC
to set a definitive timeline for conversion to IFRSSEC IFRS Roundtable ndashAugust 2008 Discussion on performance of IFRS and US GAAP during
credit crisis Consensus that IFRS held up well if not better than US
GAAP Fair value still remains a challenge under both standards
Discussion on areas where continued convergence is needed
Recent Regulatory Developments
1048707SEC Proposing Release sets the stage for possible mandatory adoption of IFRS by US issuers beginning with fiscal years ending after December 15 2014 for large accelerated filers
1048707Roadmap contains certain milestones to be achievedndashSEC Commission to review milestone progress in 2011 before issuing a final rule for mandatory adoption
1048707Proposed rule to permit certain US issuers the option to use IFRS for fiscal years ending after December 15 2009ndashThree years of financial statements must be presentedndashIssuers must be in the top 20 companies in their industry
based on market capitalization andtheir industry peer groupmustpredominantly report under IFRS
US GAAP ndash IFRS ConvergenceConvergence is to be achieved through
Formal liaison relationshipsMonitoring of FASB and IASB major projectsShort-term convergence projectsJoint projects
Ongoing Convergence Efforts
IASB and FASB reaffirm convergence effortsUpdating of the ldquoNorwalk Agreementrdquo
Focus is on the process and converging general principlesLess focus on converging details
Involves several projectsldquoShort-termrdquo convergence projects Joint conceptual framework projectsOther Joint convergence projectsOther IASB projects
Future prospects
Recent FASBIASB StandardsldquoHigh Levelrdquo Convergence
Description FASB Issuances IASB Issuances
Share-based payments
FAS 123R IFRS 2
Business combinations
FAS 141R IFRS 3 (2008)
Goodwill and other intangible assets
FAS 142 IAS 36 and IAS 38
Long-lived assets held for sale and discontinued operations
FAS 144 IFRS 5
Fair value option and measurement guidance
FAS 155 FAS 157 and FAS 159
IAS 39
Even though these were joint projects key differences still remain
US GAAP ndash IFRS Convergence ndash Where are we now
Boards have achieved ldquohigh-levelrdquo convergence in some areasExamples include income taxes business
combinations share-based payments etcOther areas models are very different
Examples include debtequity classification de-recognition consolidation etc
US GAAP ndash IFRS Convergence ndash Where are we now
A study of 130 reconciliations from foreign filers using IFRS in 2006 showed the differences between the two accounting systems can be quite largeApprox 23 of the companies showed higher
earnings under IFRSOnly two companies in the study showed the
same earnings under both IFRS and US GAAP
US GAAP ndash IFRS Convergence ndash Where are we now
Impact to EquitySlightly more than half of the cos Showed
greater equity under IFRS1 company had the same equity
The following areas contributed significantly to the differencesDeferred taxes PPampE pensions minority
interest capitalization of interest purchase price accounting and asset impairment
First Time Adoption of IFRS
Terminology Differences IFRS US GAAP
Shares Stock Stock Inventory Reserves Equity Associate Investee
Provision Accrual True and fair Presents fairly
Overview of IFRS 1
Applicable when an entity makes its first explicit and unreserved reference to IFRSGenerally apply retrospectively all IFRS effective at
reporting dateCertain exemptions can be electedSome exceptions that must be followed
Requires one year of comparative financial information
Transition adjustments recognized in retained earnings
Must explain effect of transition to IFRS
ScopeAn entity is a ldquofirst-time adopterrdquo if the most
previous financial statements were prepared In conformity with IFRS in all respects except that
an explicit and unreserved statement of compliance was not presented
Stating compliance with some but not all of IFRSWith a reconciliation of some amounts to IFRSOn an IFRS basis for internal use only
Terms to Remember
1048707First IFRS financial statementsndashFirst annual financial statements in which an ldquoexplicit and unreservedrdquo reference to compliance with IFRS
1048707Date of transition to IFRSndashBeginning of the earliest comparable period presented in an entityrsquos first IFRS financial statements
1048707Reporting datendashThe end of the latest period covered by financial statements or by an interim financial report
Compliance with IFRS
Compliance with IFRS includesAll active standards (IASs and IFRSs)All active interpretations (SICs and IFRICs)IFRS requires presentation of comparative
periodMust make explicit and unreserved statement
of compliance
The Good the Bad and the Ugly
The goodndashYou know more about IFRS than you think Many areas are similar to US GAAP
The badndashThere are significant areas of difference New way of thinking about standards
Just plain uglyndashThere has been historically lax practices in applying IFRS (ldquoIFRS literdquo)
Overview of Key ConceptsConcept DiscussionAccounting policies Specific principles bases
conventions rules and practices
Estimates Adjustments in the carrying amount of assets or liabilities
Result from new information or developments
Errors Material omissions or misstatements in financial statements
Include clerical errors mistakes in application oversight or misinterpretation of facts fraud
Material Omissions or misstatements that individually or collectively influence
the economic decisions of usersConsider the size and nature of the
item
IFRS Accounting Policies ndash IAS 8
IAS 8 established ldquohierarchyrdquo when choosing IFRS accounting policies
1Apply any specific IFRS consider any relevant implementation guidance
2Refer to other IFRSs dealing with similar or related issues
3IFRS Framework4Consider pronouncement of other standard-
setting bodies or industry practices if consistent with the above steps
Consistency of Accounting Policies ndash IAS 8
If one or more alternative methods are available
Choose and apply one method for the consolidated entity For all transactionitems or
If expressly permitted for all transactionsitems etc in a category of items
If expressly permitted on a transaction by transaction basis
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
Global IFRS reporting trends
IFRSDrivers
bull Enhances transparencycomparabilitybull Eases flow of capital globally thus
possible reduction in cost of capitalbull Facilitates accounting and reporting
bull IFRS quickly picking up share of Global F500 companies 203
268
29
183
113
204
0
50
100
150
200
250
300
2004 2007
US GAAP
Other
IFRS
Recent Regulatory Developments
SEC Concept Release on allowing US issuers a choice between IFRS and US GAAP
Elimination of US GAAP reconciliation for Foreign Private Issuers using IFRS
FASB panel discussion of US moving to IFRSEncouragement from stakeholders for the SEC
to set a definitive timeline for conversion to IFRSSEC IFRS Roundtable ndashAugust 2008 Discussion on performance of IFRS and US GAAP during
credit crisis Consensus that IFRS held up well if not better than US
GAAP Fair value still remains a challenge under both standards
Discussion on areas where continued convergence is needed
Recent Regulatory Developments
1048707SEC Proposing Release sets the stage for possible mandatory adoption of IFRS by US issuers beginning with fiscal years ending after December 15 2014 for large accelerated filers
1048707Roadmap contains certain milestones to be achievedndashSEC Commission to review milestone progress in 2011 before issuing a final rule for mandatory adoption
1048707Proposed rule to permit certain US issuers the option to use IFRS for fiscal years ending after December 15 2009ndashThree years of financial statements must be presentedndashIssuers must be in the top 20 companies in their industry
based on market capitalization andtheir industry peer groupmustpredominantly report under IFRS
US GAAP ndash IFRS ConvergenceConvergence is to be achieved through
Formal liaison relationshipsMonitoring of FASB and IASB major projectsShort-term convergence projectsJoint projects
Ongoing Convergence Efforts
IASB and FASB reaffirm convergence effortsUpdating of the ldquoNorwalk Agreementrdquo
Focus is on the process and converging general principlesLess focus on converging details
Involves several projectsldquoShort-termrdquo convergence projects Joint conceptual framework projectsOther Joint convergence projectsOther IASB projects
Future prospects
Recent FASBIASB StandardsldquoHigh Levelrdquo Convergence
Description FASB Issuances IASB Issuances
Share-based payments
FAS 123R IFRS 2
Business combinations
FAS 141R IFRS 3 (2008)
Goodwill and other intangible assets
FAS 142 IAS 36 and IAS 38
Long-lived assets held for sale and discontinued operations
FAS 144 IFRS 5
Fair value option and measurement guidance
FAS 155 FAS 157 and FAS 159
IAS 39
Even though these were joint projects key differences still remain
US GAAP ndash IFRS Convergence ndash Where are we now
Boards have achieved ldquohigh-levelrdquo convergence in some areasExamples include income taxes business
combinations share-based payments etcOther areas models are very different
Examples include debtequity classification de-recognition consolidation etc
US GAAP ndash IFRS Convergence ndash Where are we now
A study of 130 reconciliations from foreign filers using IFRS in 2006 showed the differences between the two accounting systems can be quite largeApprox 23 of the companies showed higher
earnings under IFRSOnly two companies in the study showed the
same earnings under both IFRS and US GAAP
US GAAP ndash IFRS Convergence ndash Where are we now
Impact to EquitySlightly more than half of the cos Showed
greater equity under IFRS1 company had the same equity
The following areas contributed significantly to the differencesDeferred taxes PPampE pensions minority
interest capitalization of interest purchase price accounting and asset impairment
First Time Adoption of IFRS
Terminology Differences IFRS US GAAP
Shares Stock Stock Inventory Reserves Equity Associate Investee
Provision Accrual True and fair Presents fairly
Overview of IFRS 1
Applicable when an entity makes its first explicit and unreserved reference to IFRSGenerally apply retrospectively all IFRS effective at
reporting dateCertain exemptions can be electedSome exceptions that must be followed
Requires one year of comparative financial information
Transition adjustments recognized in retained earnings
Must explain effect of transition to IFRS
ScopeAn entity is a ldquofirst-time adopterrdquo if the most
previous financial statements were prepared In conformity with IFRS in all respects except that
an explicit and unreserved statement of compliance was not presented
Stating compliance with some but not all of IFRSWith a reconciliation of some amounts to IFRSOn an IFRS basis for internal use only
Terms to Remember
1048707First IFRS financial statementsndashFirst annual financial statements in which an ldquoexplicit and unreservedrdquo reference to compliance with IFRS
1048707Date of transition to IFRSndashBeginning of the earliest comparable period presented in an entityrsquos first IFRS financial statements
1048707Reporting datendashThe end of the latest period covered by financial statements or by an interim financial report
Compliance with IFRS
Compliance with IFRS includesAll active standards (IASs and IFRSs)All active interpretations (SICs and IFRICs)IFRS requires presentation of comparative
periodMust make explicit and unreserved statement
of compliance
The Good the Bad and the Ugly
The goodndashYou know more about IFRS than you think Many areas are similar to US GAAP
The badndashThere are significant areas of difference New way of thinking about standards
Just plain uglyndashThere has been historically lax practices in applying IFRS (ldquoIFRS literdquo)
Overview of Key ConceptsConcept DiscussionAccounting policies Specific principles bases
conventions rules and practices
Estimates Adjustments in the carrying amount of assets or liabilities
Result from new information or developments
Errors Material omissions or misstatements in financial statements
Include clerical errors mistakes in application oversight or misinterpretation of facts fraud
Material Omissions or misstatements that individually or collectively influence
the economic decisions of usersConsider the size and nature of the
item
IFRS Accounting Policies ndash IAS 8
IAS 8 established ldquohierarchyrdquo when choosing IFRS accounting policies
1Apply any specific IFRS consider any relevant implementation guidance
2Refer to other IFRSs dealing with similar or related issues
3IFRS Framework4Consider pronouncement of other standard-
setting bodies or industry practices if consistent with the above steps
Consistency of Accounting Policies ndash IAS 8
If one or more alternative methods are available
Choose and apply one method for the consolidated entity For all transactionitems or
If expressly permitted for all transactionsitems etc in a category of items
If expressly permitted on a transaction by transaction basis
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
Recent Regulatory Developments
SEC Concept Release on allowing US issuers a choice between IFRS and US GAAP
Elimination of US GAAP reconciliation for Foreign Private Issuers using IFRS
FASB panel discussion of US moving to IFRSEncouragement from stakeholders for the SEC
to set a definitive timeline for conversion to IFRSSEC IFRS Roundtable ndashAugust 2008 Discussion on performance of IFRS and US GAAP during
credit crisis Consensus that IFRS held up well if not better than US
GAAP Fair value still remains a challenge under both standards
Discussion on areas where continued convergence is needed
Recent Regulatory Developments
1048707SEC Proposing Release sets the stage for possible mandatory adoption of IFRS by US issuers beginning with fiscal years ending after December 15 2014 for large accelerated filers
1048707Roadmap contains certain milestones to be achievedndashSEC Commission to review milestone progress in 2011 before issuing a final rule for mandatory adoption
1048707Proposed rule to permit certain US issuers the option to use IFRS for fiscal years ending after December 15 2009ndashThree years of financial statements must be presentedndashIssuers must be in the top 20 companies in their industry
based on market capitalization andtheir industry peer groupmustpredominantly report under IFRS
US GAAP ndash IFRS ConvergenceConvergence is to be achieved through
Formal liaison relationshipsMonitoring of FASB and IASB major projectsShort-term convergence projectsJoint projects
Ongoing Convergence Efforts
IASB and FASB reaffirm convergence effortsUpdating of the ldquoNorwalk Agreementrdquo
Focus is on the process and converging general principlesLess focus on converging details
Involves several projectsldquoShort-termrdquo convergence projects Joint conceptual framework projectsOther Joint convergence projectsOther IASB projects
Future prospects
Recent FASBIASB StandardsldquoHigh Levelrdquo Convergence
Description FASB Issuances IASB Issuances
Share-based payments
FAS 123R IFRS 2
Business combinations
FAS 141R IFRS 3 (2008)
Goodwill and other intangible assets
FAS 142 IAS 36 and IAS 38
Long-lived assets held for sale and discontinued operations
FAS 144 IFRS 5
Fair value option and measurement guidance
FAS 155 FAS 157 and FAS 159
IAS 39
Even though these were joint projects key differences still remain
US GAAP ndash IFRS Convergence ndash Where are we now
Boards have achieved ldquohigh-levelrdquo convergence in some areasExamples include income taxes business
combinations share-based payments etcOther areas models are very different
Examples include debtequity classification de-recognition consolidation etc
US GAAP ndash IFRS Convergence ndash Where are we now
A study of 130 reconciliations from foreign filers using IFRS in 2006 showed the differences between the two accounting systems can be quite largeApprox 23 of the companies showed higher
earnings under IFRSOnly two companies in the study showed the
same earnings under both IFRS and US GAAP
US GAAP ndash IFRS Convergence ndash Where are we now
Impact to EquitySlightly more than half of the cos Showed
greater equity under IFRS1 company had the same equity
The following areas contributed significantly to the differencesDeferred taxes PPampE pensions minority
interest capitalization of interest purchase price accounting and asset impairment
First Time Adoption of IFRS
Terminology Differences IFRS US GAAP
Shares Stock Stock Inventory Reserves Equity Associate Investee
Provision Accrual True and fair Presents fairly
Overview of IFRS 1
Applicable when an entity makes its first explicit and unreserved reference to IFRSGenerally apply retrospectively all IFRS effective at
reporting dateCertain exemptions can be electedSome exceptions that must be followed
Requires one year of comparative financial information
Transition adjustments recognized in retained earnings
Must explain effect of transition to IFRS
ScopeAn entity is a ldquofirst-time adopterrdquo if the most
previous financial statements were prepared In conformity with IFRS in all respects except that
an explicit and unreserved statement of compliance was not presented
Stating compliance with some but not all of IFRSWith a reconciliation of some amounts to IFRSOn an IFRS basis for internal use only
Terms to Remember
1048707First IFRS financial statementsndashFirst annual financial statements in which an ldquoexplicit and unreservedrdquo reference to compliance with IFRS
1048707Date of transition to IFRSndashBeginning of the earliest comparable period presented in an entityrsquos first IFRS financial statements
1048707Reporting datendashThe end of the latest period covered by financial statements or by an interim financial report
Compliance with IFRS
Compliance with IFRS includesAll active standards (IASs and IFRSs)All active interpretations (SICs and IFRICs)IFRS requires presentation of comparative
periodMust make explicit and unreserved statement
of compliance
The Good the Bad and the Ugly
The goodndashYou know more about IFRS than you think Many areas are similar to US GAAP
The badndashThere are significant areas of difference New way of thinking about standards
Just plain uglyndashThere has been historically lax practices in applying IFRS (ldquoIFRS literdquo)
Overview of Key ConceptsConcept DiscussionAccounting policies Specific principles bases
conventions rules and practices
Estimates Adjustments in the carrying amount of assets or liabilities
Result from new information or developments
Errors Material omissions or misstatements in financial statements
Include clerical errors mistakes in application oversight or misinterpretation of facts fraud
Material Omissions or misstatements that individually or collectively influence
the economic decisions of usersConsider the size and nature of the
item
IFRS Accounting Policies ndash IAS 8
IAS 8 established ldquohierarchyrdquo when choosing IFRS accounting policies
1Apply any specific IFRS consider any relevant implementation guidance
2Refer to other IFRSs dealing with similar or related issues
3IFRS Framework4Consider pronouncement of other standard-
setting bodies or industry practices if consistent with the above steps
Consistency of Accounting Policies ndash IAS 8
If one or more alternative methods are available
Choose and apply one method for the consolidated entity For all transactionitems or
If expressly permitted for all transactionsitems etc in a category of items
If expressly permitted on a transaction by transaction basis
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
Recent Regulatory Developments
1048707SEC Proposing Release sets the stage for possible mandatory adoption of IFRS by US issuers beginning with fiscal years ending after December 15 2014 for large accelerated filers
1048707Roadmap contains certain milestones to be achievedndashSEC Commission to review milestone progress in 2011 before issuing a final rule for mandatory adoption
1048707Proposed rule to permit certain US issuers the option to use IFRS for fiscal years ending after December 15 2009ndashThree years of financial statements must be presentedndashIssuers must be in the top 20 companies in their industry
based on market capitalization andtheir industry peer groupmustpredominantly report under IFRS
US GAAP ndash IFRS ConvergenceConvergence is to be achieved through
Formal liaison relationshipsMonitoring of FASB and IASB major projectsShort-term convergence projectsJoint projects
Ongoing Convergence Efforts
IASB and FASB reaffirm convergence effortsUpdating of the ldquoNorwalk Agreementrdquo
Focus is on the process and converging general principlesLess focus on converging details
Involves several projectsldquoShort-termrdquo convergence projects Joint conceptual framework projectsOther Joint convergence projectsOther IASB projects
Future prospects
Recent FASBIASB StandardsldquoHigh Levelrdquo Convergence
Description FASB Issuances IASB Issuances
Share-based payments
FAS 123R IFRS 2
Business combinations
FAS 141R IFRS 3 (2008)
Goodwill and other intangible assets
FAS 142 IAS 36 and IAS 38
Long-lived assets held for sale and discontinued operations
FAS 144 IFRS 5
Fair value option and measurement guidance
FAS 155 FAS 157 and FAS 159
IAS 39
Even though these were joint projects key differences still remain
US GAAP ndash IFRS Convergence ndash Where are we now
Boards have achieved ldquohigh-levelrdquo convergence in some areasExamples include income taxes business
combinations share-based payments etcOther areas models are very different
Examples include debtequity classification de-recognition consolidation etc
US GAAP ndash IFRS Convergence ndash Where are we now
A study of 130 reconciliations from foreign filers using IFRS in 2006 showed the differences between the two accounting systems can be quite largeApprox 23 of the companies showed higher
earnings under IFRSOnly two companies in the study showed the
same earnings under both IFRS and US GAAP
US GAAP ndash IFRS Convergence ndash Where are we now
Impact to EquitySlightly more than half of the cos Showed
greater equity under IFRS1 company had the same equity
The following areas contributed significantly to the differencesDeferred taxes PPampE pensions minority
interest capitalization of interest purchase price accounting and asset impairment
First Time Adoption of IFRS
Terminology Differences IFRS US GAAP
Shares Stock Stock Inventory Reserves Equity Associate Investee
Provision Accrual True and fair Presents fairly
Overview of IFRS 1
Applicable when an entity makes its first explicit and unreserved reference to IFRSGenerally apply retrospectively all IFRS effective at
reporting dateCertain exemptions can be electedSome exceptions that must be followed
Requires one year of comparative financial information
Transition adjustments recognized in retained earnings
Must explain effect of transition to IFRS
ScopeAn entity is a ldquofirst-time adopterrdquo if the most
previous financial statements were prepared In conformity with IFRS in all respects except that
an explicit and unreserved statement of compliance was not presented
Stating compliance with some but not all of IFRSWith a reconciliation of some amounts to IFRSOn an IFRS basis for internal use only
Terms to Remember
1048707First IFRS financial statementsndashFirst annual financial statements in which an ldquoexplicit and unreservedrdquo reference to compliance with IFRS
1048707Date of transition to IFRSndashBeginning of the earliest comparable period presented in an entityrsquos first IFRS financial statements
1048707Reporting datendashThe end of the latest period covered by financial statements or by an interim financial report
Compliance with IFRS
Compliance with IFRS includesAll active standards (IASs and IFRSs)All active interpretations (SICs and IFRICs)IFRS requires presentation of comparative
periodMust make explicit and unreserved statement
of compliance
The Good the Bad and the Ugly
The goodndashYou know more about IFRS than you think Many areas are similar to US GAAP
The badndashThere are significant areas of difference New way of thinking about standards
Just plain uglyndashThere has been historically lax practices in applying IFRS (ldquoIFRS literdquo)
Overview of Key ConceptsConcept DiscussionAccounting policies Specific principles bases
conventions rules and practices
Estimates Adjustments in the carrying amount of assets or liabilities
Result from new information or developments
Errors Material omissions or misstatements in financial statements
Include clerical errors mistakes in application oversight or misinterpretation of facts fraud
Material Omissions or misstatements that individually or collectively influence
the economic decisions of usersConsider the size and nature of the
item
IFRS Accounting Policies ndash IAS 8
IAS 8 established ldquohierarchyrdquo when choosing IFRS accounting policies
1Apply any specific IFRS consider any relevant implementation guidance
2Refer to other IFRSs dealing with similar or related issues
3IFRS Framework4Consider pronouncement of other standard-
setting bodies or industry practices if consistent with the above steps
Consistency of Accounting Policies ndash IAS 8
If one or more alternative methods are available
Choose and apply one method for the consolidated entity For all transactionitems or
If expressly permitted for all transactionsitems etc in a category of items
If expressly permitted on a transaction by transaction basis
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
US GAAP ndash IFRS ConvergenceConvergence is to be achieved through
Formal liaison relationshipsMonitoring of FASB and IASB major projectsShort-term convergence projectsJoint projects
Ongoing Convergence Efforts
IASB and FASB reaffirm convergence effortsUpdating of the ldquoNorwalk Agreementrdquo
Focus is on the process and converging general principlesLess focus on converging details
Involves several projectsldquoShort-termrdquo convergence projects Joint conceptual framework projectsOther Joint convergence projectsOther IASB projects
Future prospects
Recent FASBIASB StandardsldquoHigh Levelrdquo Convergence
Description FASB Issuances IASB Issuances
Share-based payments
FAS 123R IFRS 2
Business combinations
FAS 141R IFRS 3 (2008)
Goodwill and other intangible assets
FAS 142 IAS 36 and IAS 38
Long-lived assets held for sale and discontinued operations
FAS 144 IFRS 5
Fair value option and measurement guidance
FAS 155 FAS 157 and FAS 159
IAS 39
Even though these were joint projects key differences still remain
US GAAP ndash IFRS Convergence ndash Where are we now
Boards have achieved ldquohigh-levelrdquo convergence in some areasExamples include income taxes business
combinations share-based payments etcOther areas models are very different
Examples include debtequity classification de-recognition consolidation etc
US GAAP ndash IFRS Convergence ndash Where are we now
A study of 130 reconciliations from foreign filers using IFRS in 2006 showed the differences between the two accounting systems can be quite largeApprox 23 of the companies showed higher
earnings under IFRSOnly two companies in the study showed the
same earnings under both IFRS and US GAAP
US GAAP ndash IFRS Convergence ndash Where are we now
Impact to EquitySlightly more than half of the cos Showed
greater equity under IFRS1 company had the same equity
The following areas contributed significantly to the differencesDeferred taxes PPampE pensions minority
interest capitalization of interest purchase price accounting and asset impairment
First Time Adoption of IFRS
Terminology Differences IFRS US GAAP
Shares Stock Stock Inventory Reserves Equity Associate Investee
Provision Accrual True and fair Presents fairly
Overview of IFRS 1
Applicable when an entity makes its first explicit and unreserved reference to IFRSGenerally apply retrospectively all IFRS effective at
reporting dateCertain exemptions can be electedSome exceptions that must be followed
Requires one year of comparative financial information
Transition adjustments recognized in retained earnings
Must explain effect of transition to IFRS
ScopeAn entity is a ldquofirst-time adopterrdquo if the most
previous financial statements were prepared In conformity with IFRS in all respects except that
an explicit and unreserved statement of compliance was not presented
Stating compliance with some but not all of IFRSWith a reconciliation of some amounts to IFRSOn an IFRS basis for internal use only
Terms to Remember
1048707First IFRS financial statementsndashFirst annual financial statements in which an ldquoexplicit and unreservedrdquo reference to compliance with IFRS
1048707Date of transition to IFRSndashBeginning of the earliest comparable period presented in an entityrsquos first IFRS financial statements
1048707Reporting datendashThe end of the latest period covered by financial statements or by an interim financial report
Compliance with IFRS
Compliance with IFRS includesAll active standards (IASs and IFRSs)All active interpretations (SICs and IFRICs)IFRS requires presentation of comparative
periodMust make explicit and unreserved statement
of compliance
The Good the Bad and the Ugly
The goodndashYou know more about IFRS than you think Many areas are similar to US GAAP
The badndashThere are significant areas of difference New way of thinking about standards
Just plain uglyndashThere has been historically lax practices in applying IFRS (ldquoIFRS literdquo)
Overview of Key ConceptsConcept DiscussionAccounting policies Specific principles bases
conventions rules and practices
Estimates Adjustments in the carrying amount of assets or liabilities
Result from new information or developments
Errors Material omissions or misstatements in financial statements
Include clerical errors mistakes in application oversight or misinterpretation of facts fraud
Material Omissions or misstatements that individually or collectively influence
the economic decisions of usersConsider the size and nature of the
item
IFRS Accounting Policies ndash IAS 8
IAS 8 established ldquohierarchyrdquo when choosing IFRS accounting policies
1Apply any specific IFRS consider any relevant implementation guidance
2Refer to other IFRSs dealing with similar or related issues
3IFRS Framework4Consider pronouncement of other standard-
setting bodies or industry practices if consistent with the above steps
Consistency of Accounting Policies ndash IAS 8
If one or more alternative methods are available
Choose and apply one method for the consolidated entity For all transactionitems or
If expressly permitted for all transactionsitems etc in a category of items
If expressly permitted on a transaction by transaction basis
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
Ongoing Convergence Efforts
IASB and FASB reaffirm convergence effortsUpdating of the ldquoNorwalk Agreementrdquo
Focus is on the process and converging general principlesLess focus on converging details
Involves several projectsldquoShort-termrdquo convergence projects Joint conceptual framework projectsOther Joint convergence projectsOther IASB projects
Future prospects
Recent FASBIASB StandardsldquoHigh Levelrdquo Convergence
Description FASB Issuances IASB Issuances
Share-based payments
FAS 123R IFRS 2
Business combinations
FAS 141R IFRS 3 (2008)
Goodwill and other intangible assets
FAS 142 IAS 36 and IAS 38
Long-lived assets held for sale and discontinued operations
FAS 144 IFRS 5
Fair value option and measurement guidance
FAS 155 FAS 157 and FAS 159
IAS 39
Even though these were joint projects key differences still remain
US GAAP ndash IFRS Convergence ndash Where are we now
Boards have achieved ldquohigh-levelrdquo convergence in some areasExamples include income taxes business
combinations share-based payments etcOther areas models are very different
Examples include debtequity classification de-recognition consolidation etc
US GAAP ndash IFRS Convergence ndash Where are we now
A study of 130 reconciliations from foreign filers using IFRS in 2006 showed the differences between the two accounting systems can be quite largeApprox 23 of the companies showed higher
earnings under IFRSOnly two companies in the study showed the
same earnings under both IFRS and US GAAP
US GAAP ndash IFRS Convergence ndash Where are we now
Impact to EquitySlightly more than half of the cos Showed
greater equity under IFRS1 company had the same equity
The following areas contributed significantly to the differencesDeferred taxes PPampE pensions minority
interest capitalization of interest purchase price accounting and asset impairment
First Time Adoption of IFRS
Terminology Differences IFRS US GAAP
Shares Stock Stock Inventory Reserves Equity Associate Investee
Provision Accrual True and fair Presents fairly
Overview of IFRS 1
Applicable when an entity makes its first explicit and unreserved reference to IFRSGenerally apply retrospectively all IFRS effective at
reporting dateCertain exemptions can be electedSome exceptions that must be followed
Requires one year of comparative financial information
Transition adjustments recognized in retained earnings
Must explain effect of transition to IFRS
ScopeAn entity is a ldquofirst-time adopterrdquo if the most
previous financial statements were prepared In conformity with IFRS in all respects except that
an explicit and unreserved statement of compliance was not presented
Stating compliance with some but not all of IFRSWith a reconciliation of some amounts to IFRSOn an IFRS basis for internal use only
Terms to Remember
1048707First IFRS financial statementsndashFirst annual financial statements in which an ldquoexplicit and unreservedrdquo reference to compliance with IFRS
1048707Date of transition to IFRSndashBeginning of the earliest comparable period presented in an entityrsquos first IFRS financial statements
1048707Reporting datendashThe end of the latest period covered by financial statements or by an interim financial report
Compliance with IFRS
Compliance with IFRS includesAll active standards (IASs and IFRSs)All active interpretations (SICs and IFRICs)IFRS requires presentation of comparative
periodMust make explicit and unreserved statement
of compliance
The Good the Bad and the Ugly
The goodndashYou know more about IFRS than you think Many areas are similar to US GAAP
The badndashThere are significant areas of difference New way of thinking about standards
Just plain uglyndashThere has been historically lax practices in applying IFRS (ldquoIFRS literdquo)
Overview of Key ConceptsConcept DiscussionAccounting policies Specific principles bases
conventions rules and practices
Estimates Adjustments in the carrying amount of assets or liabilities
Result from new information or developments
Errors Material omissions or misstatements in financial statements
Include clerical errors mistakes in application oversight or misinterpretation of facts fraud
Material Omissions or misstatements that individually or collectively influence
the economic decisions of usersConsider the size and nature of the
item
IFRS Accounting Policies ndash IAS 8
IAS 8 established ldquohierarchyrdquo when choosing IFRS accounting policies
1Apply any specific IFRS consider any relevant implementation guidance
2Refer to other IFRSs dealing with similar or related issues
3IFRS Framework4Consider pronouncement of other standard-
setting bodies or industry practices if consistent with the above steps
Consistency of Accounting Policies ndash IAS 8
If one or more alternative methods are available
Choose and apply one method for the consolidated entity For all transactionitems or
If expressly permitted for all transactionsitems etc in a category of items
If expressly permitted on a transaction by transaction basis
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
Recent FASBIASB StandardsldquoHigh Levelrdquo Convergence
Description FASB Issuances IASB Issuances
Share-based payments
FAS 123R IFRS 2
Business combinations
FAS 141R IFRS 3 (2008)
Goodwill and other intangible assets
FAS 142 IAS 36 and IAS 38
Long-lived assets held for sale and discontinued operations
FAS 144 IFRS 5
Fair value option and measurement guidance
FAS 155 FAS 157 and FAS 159
IAS 39
Even though these were joint projects key differences still remain
US GAAP ndash IFRS Convergence ndash Where are we now
Boards have achieved ldquohigh-levelrdquo convergence in some areasExamples include income taxes business
combinations share-based payments etcOther areas models are very different
Examples include debtequity classification de-recognition consolidation etc
US GAAP ndash IFRS Convergence ndash Where are we now
A study of 130 reconciliations from foreign filers using IFRS in 2006 showed the differences between the two accounting systems can be quite largeApprox 23 of the companies showed higher
earnings under IFRSOnly two companies in the study showed the
same earnings under both IFRS and US GAAP
US GAAP ndash IFRS Convergence ndash Where are we now
Impact to EquitySlightly more than half of the cos Showed
greater equity under IFRS1 company had the same equity
The following areas contributed significantly to the differencesDeferred taxes PPampE pensions minority
interest capitalization of interest purchase price accounting and asset impairment
First Time Adoption of IFRS
Terminology Differences IFRS US GAAP
Shares Stock Stock Inventory Reserves Equity Associate Investee
Provision Accrual True and fair Presents fairly
Overview of IFRS 1
Applicable when an entity makes its first explicit and unreserved reference to IFRSGenerally apply retrospectively all IFRS effective at
reporting dateCertain exemptions can be electedSome exceptions that must be followed
Requires one year of comparative financial information
Transition adjustments recognized in retained earnings
Must explain effect of transition to IFRS
ScopeAn entity is a ldquofirst-time adopterrdquo if the most
previous financial statements were prepared In conformity with IFRS in all respects except that
an explicit and unreserved statement of compliance was not presented
Stating compliance with some but not all of IFRSWith a reconciliation of some amounts to IFRSOn an IFRS basis for internal use only
Terms to Remember
1048707First IFRS financial statementsndashFirst annual financial statements in which an ldquoexplicit and unreservedrdquo reference to compliance with IFRS
1048707Date of transition to IFRSndashBeginning of the earliest comparable period presented in an entityrsquos first IFRS financial statements
1048707Reporting datendashThe end of the latest period covered by financial statements or by an interim financial report
Compliance with IFRS
Compliance with IFRS includesAll active standards (IASs and IFRSs)All active interpretations (SICs and IFRICs)IFRS requires presentation of comparative
periodMust make explicit and unreserved statement
of compliance
The Good the Bad and the Ugly
The goodndashYou know more about IFRS than you think Many areas are similar to US GAAP
The badndashThere are significant areas of difference New way of thinking about standards
Just plain uglyndashThere has been historically lax practices in applying IFRS (ldquoIFRS literdquo)
Overview of Key ConceptsConcept DiscussionAccounting policies Specific principles bases
conventions rules and practices
Estimates Adjustments in the carrying amount of assets or liabilities
Result from new information or developments
Errors Material omissions or misstatements in financial statements
Include clerical errors mistakes in application oversight or misinterpretation of facts fraud
Material Omissions or misstatements that individually or collectively influence
the economic decisions of usersConsider the size and nature of the
item
IFRS Accounting Policies ndash IAS 8
IAS 8 established ldquohierarchyrdquo when choosing IFRS accounting policies
1Apply any specific IFRS consider any relevant implementation guidance
2Refer to other IFRSs dealing with similar or related issues
3IFRS Framework4Consider pronouncement of other standard-
setting bodies or industry practices if consistent with the above steps
Consistency of Accounting Policies ndash IAS 8
If one or more alternative methods are available
Choose and apply one method for the consolidated entity For all transactionitems or
If expressly permitted for all transactionsitems etc in a category of items
If expressly permitted on a transaction by transaction basis
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
US GAAP ndash IFRS Convergence ndash Where are we now
Boards have achieved ldquohigh-levelrdquo convergence in some areasExamples include income taxes business
combinations share-based payments etcOther areas models are very different
Examples include debtequity classification de-recognition consolidation etc
US GAAP ndash IFRS Convergence ndash Where are we now
A study of 130 reconciliations from foreign filers using IFRS in 2006 showed the differences between the two accounting systems can be quite largeApprox 23 of the companies showed higher
earnings under IFRSOnly two companies in the study showed the
same earnings under both IFRS and US GAAP
US GAAP ndash IFRS Convergence ndash Where are we now
Impact to EquitySlightly more than half of the cos Showed
greater equity under IFRS1 company had the same equity
The following areas contributed significantly to the differencesDeferred taxes PPampE pensions minority
interest capitalization of interest purchase price accounting and asset impairment
First Time Adoption of IFRS
Terminology Differences IFRS US GAAP
Shares Stock Stock Inventory Reserves Equity Associate Investee
Provision Accrual True and fair Presents fairly
Overview of IFRS 1
Applicable when an entity makes its first explicit and unreserved reference to IFRSGenerally apply retrospectively all IFRS effective at
reporting dateCertain exemptions can be electedSome exceptions that must be followed
Requires one year of comparative financial information
Transition adjustments recognized in retained earnings
Must explain effect of transition to IFRS
ScopeAn entity is a ldquofirst-time adopterrdquo if the most
previous financial statements were prepared In conformity with IFRS in all respects except that
an explicit and unreserved statement of compliance was not presented
Stating compliance with some but not all of IFRSWith a reconciliation of some amounts to IFRSOn an IFRS basis for internal use only
Terms to Remember
1048707First IFRS financial statementsndashFirst annual financial statements in which an ldquoexplicit and unreservedrdquo reference to compliance with IFRS
1048707Date of transition to IFRSndashBeginning of the earliest comparable period presented in an entityrsquos first IFRS financial statements
1048707Reporting datendashThe end of the latest period covered by financial statements or by an interim financial report
Compliance with IFRS
Compliance with IFRS includesAll active standards (IASs and IFRSs)All active interpretations (SICs and IFRICs)IFRS requires presentation of comparative
periodMust make explicit and unreserved statement
of compliance
The Good the Bad and the Ugly
The goodndashYou know more about IFRS than you think Many areas are similar to US GAAP
The badndashThere are significant areas of difference New way of thinking about standards
Just plain uglyndashThere has been historically lax practices in applying IFRS (ldquoIFRS literdquo)
Overview of Key ConceptsConcept DiscussionAccounting policies Specific principles bases
conventions rules and practices
Estimates Adjustments in the carrying amount of assets or liabilities
Result from new information or developments
Errors Material omissions or misstatements in financial statements
Include clerical errors mistakes in application oversight or misinterpretation of facts fraud
Material Omissions or misstatements that individually or collectively influence
the economic decisions of usersConsider the size and nature of the
item
IFRS Accounting Policies ndash IAS 8
IAS 8 established ldquohierarchyrdquo when choosing IFRS accounting policies
1Apply any specific IFRS consider any relevant implementation guidance
2Refer to other IFRSs dealing with similar or related issues
3IFRS Framework4Consider pronouncement of other standard-
setting bodies or industry practices if consistent with the above steps
Consistency of Accounting Policies ndash IAS 8
If one or more alternative methods are available
Choose and apply one method for the consolidated entity For all transactionitems or
If expressly permitted for all transactionsitems etc in a category of items
If expressly permitted on a transaction by transaction basis
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
US GAAP ndash IFRS Convergence ndash Where are we now
A study of 130 reconciliations from foreign filers using IFRS in 2006 showed the differences between the two accounting systems can be quite largeApprox 23 of the companies showed higher
earnings under IFRSOnly two companies in the study showed the
same earnings under both IFRS and US GAAP
US GAAP ndash IFRS Convergence ndash Where are we now
Impact to EquitySlightly more than half of the cos Showed
greater equity under IFRS1 company had the same equity
The following areas contributed significantly to the differencesDeferred taxes PPampE pensions minority
interest capitalization of interest purchase price accounting and asset impairment
First Time Adoption of IFRS
Terminology Differences IFRS US GAAP
Shares Stock Stock Inventory Reserves Equity Associate Investee
Provision Accrual True and fair Presents fairly
Overview of IFRS 1
Applicable when an entity makes its first explicit and unreserved reference to IFRSGenerally apply retrospectively all IFRS effective at
reporting dateCertain exemptions can be electedSome exceptions that must be followed
Requires one year of comparative financial information
Transition adjustments recognized in retained earnings
Must explain effect of transition to IFRS
ScopeAn entity is a ldquofirst-time adopterrdquo if the most
previous financial statements were prepared In conformity with IFRS in all respects except that
an explicit and unreserved statement of compliance was not presented
Stating compliance with some but not all of IFRSWith a reconciliation of some amounts to IFRSOn an IFRS basis for internal use only
Terms to Remember
1048707First IFRS financial statementsndashFirst annual financial statements in which an ldquoexplicit and unreservedrdquo reference to compliance with IFRS
1048707Date of transition to IFRSndashBeginning of the earliest comparable period presented in an entityrsquos first IFRS financial statements
1048707Reporting datendashThe end of the latest period covered by financial statements or by an interim financial report
Compliance with IFRS
Compliance with IFRS includesAll active standards (IASs and IFRSs)All active interpretations (SICs and IFRICs)IFRS requires presentation of comparative
periodMust make explicit and unreserved statement
of compliance
The Good the Bad and the Ugly
The goodndashYou know more about IFRS than you think Many areas are similar to US GAAP
The badndashThere are significant areas of difference New way of thinking about standards
Just plain uglyndashThere has been historically lax practices in applying IFRS (ldquoIFRS literdquo)
Overview of Key ConceptsConcept DiscussionAccounting policies Specific principles bases
conventions rules and practices
Estimates Adjustments in the carrying amount of assets or liabilities
Result from new information or developments
Errors Material omissions or misstatements in financial statements
Include clerical errors mistakes in application oversight or misinterpretation of facts fraud
Material Omissions or misstatements that individually or collectively influence
the economic decisions of usersConsider the size and nature of the
item
IFRS Accounting Policies ndash IAS 8
IAS 8 established ldquohierarchyrdquo when choosing IFRS accounting policies
1Apply any specific IFRS consider any relevant implementation guidance
2Refer to other IFRSs dealing with similar or related issues
3IFRS Framework4Consider pronouncement of other standard-
setting bodies or industry practices if consistent with the above steps
Consistency of Accounting Policies ndash IAS 8
If one or more alternative methods are available
Choose and apply one method for the consolidated entity For all transactionitems or
If expressly permitted for all transactionsitems etc in a category of items
If expressly permitted on a transaction by transaction basis
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
US GAAP ndash IFRS Convergence ndash Where are we now
Impact to EquitySlightly more than half of the cos Showed
greater equity under IFRS1 company had the same equity
The following areas contributed significantly to the differencesDeferred taxes PPampE pensions minority
interest capitalization of interest purchase price accounting and asset impairment
First Time Adoption of IFRS
Terminology Differences IFRS US GAAP
Shares Stock Stock Inventory Reserves Equity Associate Investee
Provision Accrual True and fair Presents fairly
Overview of IFRS 1
Applicable when an entity makes its first explicit and unreserved reference to IFRSGenerally apply retrospectively all IFRS effective at
reporting dateCertain exemptions can be electedSome exceptions that must be followed
Requires one year of comparative financial information
Transition adjustments recognized in retained earnings
Must explain effect of transition to IFRS
ScopeAn entity is a ldquofirst-time adopterrdquo if the most
previous financial statements were prepared In conformity with IFRS in all respects except that
an explicit and unreserved statement of compliance was not presented
Stating compliance with some but not all of IFRSWith a reconciliation of some amounts to IFRSOn an IFRS basis for internal use only
Terms to Remember
1048707First IFRS financial statementsndashFirst annual financial statements in which an ldquoexplicit and unreservedrdquo reference to compliance with IFRS
1048707Date of transition to IFRSndashBeginning of the earliest comparable period presented in an entityrsquos first IFRS financial statements
1048707Reporting datendashThe end of the latest period covered by financial statements or by an interim financial report
Compliance with IFRS
Compliance with IFRS includesAll active standards (IASs and IFRSs)All active interpretations (SICs and IFRICs)IFRS requires presentation of comparative
periodMust make explicit and unreserved statement
of compliance
The Good the Bad and the Ugly
The goodndashYou know more about IFRS than you think Many areas are similar to US GAAP
The badndashThere are significant areas of difference New way of thinking about standards
Just plain uglyndashThere has been historically lax practices in applying IFRS (ldquoIFRS literdquo)
Overview of Key ConceptsConcept DiscussionAccounting policies Specific principles bases
conventions rules and practices
Estimates Adjustments in the carrying amount of assets or liabilities
Result from new information or developments
Errors Material omissions or misstatements in financial statements
Include clerical errors mistakes in application oversight or misinterpretation of facts fraud
Material Omissions or misstatements that individually or collectively influence
the economic decisions of usersConsider the size and nature of the
item
IFRS Accounting Policies ndash IAS 8
IAS 8 established ldquohierarchyrdquo when choosing IFRS accounting policies
1Apply any specific IFRS consider any relevant implementation guidance
2Refer to other IFRSs dealing with similar or related issues
3IFRS Framework4Consider pronouncement of other standard-
setting bodies or industry practices if consistent with the above steps
Consistency of Accounting Policies ndash IAS 8
If one or more alternative methods are available
Choose and apply one method for the consolidated entity For all transactionitems or
If expressly permitted for all transactionsitems etc in a category of items
If expressly permitted on a transaction by transaction basis
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
First Time Adoption of IFRS
Terminology Differences IFRS US GAAP
Shares Stock Stock Inventory Reserves Equity Associate Investee
Provision Accrual True and fair Presents fairly
Overview of IFRS 1
Applicable when an entity makes its first explicit and unreserved reference to IFRSGenerally apply retrospectively all IFRS effective at
reporting dateCertain exemptions can be electedSome exceptions that must be followed
Requires one year of comparative financial information
Transition adjustments recognized in retained earnings
Must explain effect of transition to IFRS
ScopeAn entity is a ldquofirst-time adopterrdquo if the most
previous financial statements were prepared In conformity with IFRS in all respects except that
an explicit and unreserved statement of compliance was not presented
Stating compliance with some but not all of IFRSWith a reconciliation of some amounts to IFRSOn an IFRS basis for internal use only
Terms to Remember
1048707First IFRS financial statementsndashFirst annual financial statements in which an ldquoexplicit and unreservedrdquo reference to compliance with IFRS
1048707Date of transition to IFRSndashBeginning of the earliest comparable period presented in an entityrsquos first IFRS financial statements
1048707Reporting datendashThe end of the latest period covered by financial statements or by an interim financial report
Compliance with IFRS
Compliance with IFRS includesAll active standards (IASs and IFRSs)All active interpretations (SICs and IFRICs)IFRS requires presentation of comparative
periodMust make explicit and unreserved statement
of compliance
The Good the Bad and the Ugly
The goodndashYou know more about IFRS than you think Many areas are similar to US GAAP
The badndashThere are significant areas of difference New way of thinking about standards
Just plain uglyndashThere has been historically lax practices in applying IFRS (ldquoIFRS literdquo)
Overview of Key ConceptsConcept DiscussionAccounting policies Specific principles bases
conventions rules and practices
Estimates Adjustments in the carrying amount of assets or liabilities
Result from new information or developments
Errors Material omissions or misstatements in financial statements
Include clerical errors mistakes in application oversight or misinterpretation of facts fraud
Material Omissions or misstatements that individually or collectively influence
the economic decisions of usersConsider the size and nature of the
item
IFRS Accounting Policies ndash IAS 8
IAS 8 established ldquohierarchyrdquo when choosing IFRS accounting policies
1Apply any specific IFRS consider any relevant implementation guidance
2Refer to other IFRSs dealing with similar or related issues
3IFRS Framework4Consider pronouncement of other standard-
setting bodies or industry practices if consistent with the above steps
Consistency of Accounting Policies ndash IAS 8
If one or more alternative methods are available
Choose and apply one method for the consolidated entity For all transactionitems or
If expressly permitted for all transactionsitems etc in a category of items
If expressly permitted on a transaction by transaction basis
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
Terminology Differences IFRS US GAAP
Shares Stock Stock Inventory Reserves Equity Associate Investee
Provision Accrual True and fair Presents fairly
Overview of IFRS 1
Applicable when an entity makes its first explicit and unreserved reference to IFRSGenerally apply retrospectively all IFRS effective at
reporting dateCertain exemptions can be electedSome exceptions that must be followed
Requires one year of comparative financial information
Transition adjustments recognized in retained earnings
Must explain effect of transition to IFRS
ScopeAn entity is a ldquofirst-time adopterrdquo if the most
previous financial statements were prepared In conformity with IFRS in all respects except that
an explicit and unreserved statement of compliance was not presented
Stating compliance with some but not all of IFRSWith a reconciliation of some amounts to IFRSOn an IFRS basis for internal use only
Terms to Remember
1048707First IFRS financial statementsndashFirst annual financial statements in which an ldquoexplicit and unreservedrdquo reference to compliance with IFRS
1048707Date of transition to IFRSndashBeginning of the earliest comparable period presented in an entityrsquos first IFRS financial statements
1048707Reporting datendashThe end of the latest period covered by financial statements or by an interim financial report
Compliance with IFRS
Compliance with IFRS includesAll active standards (IASs and IFRSs)All active interpretations (SICs and IFRICs)IFRS requires presentation of comparative
periodMust make explicit and unreserved statement
of compliance
The Good the Bad and the Ugly
The goodndashYou know more about IFRS than you think Many areas are similar to US GAAP
The badndashThere are significant areas of difference New way of thinking about standards
Just plain uglyndashThere has been historically lax practices in applying IFRS (ldquoIFRS literdquo)
Overview of Key ConceptsConcept DiscussionAccounting policies Specific principles bases
conventions rules and practices
Estimates Adjustments in the carrying amount of assets or liabilities
Result from new information or developments
Errors Material omissions or misstatements in financial statements
Include clerical errors mistakes in application oversight or misinterpretation of facts fraud
Material Omissions or misstatements that individually or collectively influence
the economic decisions of usersConsider the size and nature of the
item
IFRS Accounting Policies ndash IAS 8
IAS 8 established ldquohierarchyrdquo when choosing IFRS accounting policies
1Apply any specific IFRS consider any relevant implementation guidance
2Refer to other IFRSs dealing with similar or related issues
3IFRS Framework4Consider pronouncement of other standard-
setting bodies or industry practices if consistent with the above steps
Consistency of Accounting Policies ndash IAS 8
If one or more alternative methods are available
Choose and apply one method for the consolidated entity For all transactionitems or
If expressly permitted for all transactionsitems etc in a category of items
If expressly permitted on a transaction by transaction basis
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
Overview of IFRS 1
Applicable when an entity makes its first explicit and unreserved reference to IFRSGenerally apply retrospectively all IFRS effective at
reporting dateCertain exemptions can be electedSome exceptions that must be followed
Requires one year of comparative financial information
Transition adjustments recognized in retained earnings
Must explain effect of transition to IFRS
ScopeAn entity is a ldquofirst-time adopterrdquo if the most
previous financial statements were prepared In conformity with IFRS in all respects except that
an explicit and unreserved statement of compliance was not presented
Stating compliance with some but not all of IFRSWith a reconciliation of some amounts to IFRSOn an IFRS basis for internal use only
Terms to Remember
1048707First IFRS financial statementsndashFirst annual financial statements in which an ldquoexplicit and unreservedrdquo reference to compliance with IFRS
1048707Date of transition to IFRSndashBeginning of the earliest comparable period presented in an entityrsquos first IFRS financial statements
1048707Reporting datendashThe end of the latest period covered by financial statements or by an interim financial report
Compliance with IFRS
Compliance with IFRS includesAll active standards (IASs and IFRSs)All active interpretations (SICs and IFRICs)IFRS requires presentation of comparative
periodMust make explicit and unreserved statement
of compliance
The Good the Bad and the Ugly
The goodndashYou know more about IFRS than you think Many areas are similar to US GAAP
The badndashThere are significant areas of difference New way of thinking about standards
Just plain uglyndashThere has been historically lax practices in applying IFRS (ldquoIFRS literdquo)
Overview of Key ConceptsConcept DiscussionAccounting policies Specific principles bases
conventions rules and practices
Estimates Adjustments in the carrying amount of assets or liabilities
Result from new information or developments
Errors Material omissions or misstatements in financial statements
Include clerical errors mistakes in application oversight or misinterpretation of facts fraud
Material Omissions or misstatements that individually or collectively influence
the economic decisions of usersConsider the size and nature of the
item
IFRS Accounting Policies ndash IAS 8
IAS 8 established ldquohierarchyrdquo when choosing IFRS accounting policies
1Apply any specific IFRS consider any relevant implementation guidance
2Refer to other IFRSs dealing with similar or related issues
3IFRS Framework4Consider pronouncement of other standard-
setting bodies or industry practices if consistent with the above steps
Consistency of Accounting Policies ndash IAS 8
If one or more alternative methods are available
Choose and apply one method for the consolidated entity For all transactionitems or
If expressly permitted for all transactionsitems etc in a category of items
If expressly permitted on a transaction by transaction basis
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
ScopeAn entity is a ldquofirst-time adopterrdquo if the most
previous financial statements were prepared In conformity with IFRS in all respects except that
an explicit and unreserved statement of compliance was not presented
Stating compliance with some but not all of IFRSWith a reconciliation of some amounts to IFRSOn an IFRS basis for internal use only
Terms to Remember
1048707First IFRS financial statementsndashFirst annual financial statements in which an ldquoexplicit and unreservedrdquo reference to compliance with IFRS
1048707Date of transition to IFRSndashBeginning of the earliest comparable period presented in an entityrsquos first IFRS financial statements
1048707Reporting datendashThe end of the latest period covered by financial statements or by an interim financial report
Compliance with IFRS
Compliance with IFRS includesAll active standards (IASs and IFRSs)All active interpretations (SICs and IFRICs)IFRS requires presentation of comparative
periodMust make explicit and unreserved statement
of compliance
The Good the Bad and the Ugly
The goodndashYou know more about IFRS than you think Many areas are similar to US GAAP
The badndashThere are significant areas of difference New way of thinking about standards
Just plain uglyndashThere has been historically lax practices in applying IFRS (ldquoIFRS literdquo)
Overview of Key ConceptsConcept DiscussionAccounting policies Specific principles bases
conventions rules and practices
Estimates Adjustments in the carrying amount of assets or liabilities
Result from new information or developments
Errors Material omissions or misstatements in financial statements
Include clerical errors mistakes in application oversight or misinterpretation of facts fraud
Material Omissions or misstatements that individually or collectively influence
the economic decisions of usersConsider the size and nature of the
item
IFRS Accounting Policies ndash IAS 8
IAS 8 established ldquohierarchyrdquo when choosing IFRS accounting policies
1Apply any specific IFRS consider any relevant implementation guidance
2Refer to other IFRSs dealing with similar or related issues
3IFRS Framework4Consider pronouncement of other standard-
setting bodies or industry practices if consistent with the above steps
Consistency of Accounting Policies ndash IAS 8
If one or more alternative methods are available
Choose and apply one method for the consolidated entity For all transactionitems or
If expressly permitted for all transactionsitems etc in a category of items
If expressly permitted on a transaction by transaction basis
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
Terms to Remember
1048707First IFRS financial statementsndashFirst annual financial statements in which an ldquoexplicit and unreservedrdquo reference to compliance with IFRS
1048707Date of transition to IFRSndashBeginning of the earliest comparable period presented in an entityrsquos first IFRS financial statements
1048707Reporting datendashThe end of the latest period covered by financial statements or by an interim financial report
Compliance with IFRS
Compliance with IFRS includesAll active standards (IASs and IFRSs)All active interpretations (SICs and IFRICs)IFRS requires presentation of comparative
periodMust make explicit and unreserved statement
of compliance
The Good the Bad and the Ugly
The goodndashYou know more about IFRS than you think Many areas are similar to US GAAP
The badndashThere are significant areas of difference New way of thinking about standards
Just plain uglyndashThere has been historically lax practices in applying IFRS (ldquoIFRS literdquo)
Overview of Key ConceptsConcept DiscussionAccounting policies Specific principles bases
conventions rules and practices
Estimates Adjustments in the carrying amount of assets or liabilities
Result from new information or developments
Errors Material omissions or misstatements in financial statements
Include clerical errors mistakes in application oversight or misinterpretation of facts fraud
Material Omissions or misstatements that individually or collectively influence
the economic decisions of usersConsider the size and nature of the
item
IFRS Accounting Policies ndash IAS 8
IAS 8 established ldquohierarchyrdquo when choosing IFRS accounting policies
1Apply any specific IFRS consider any relevant implementation guidance
2Refer to other IFRSs dealing with similar or related issues
3IFRS Framework4Consider pronouncement of other standard-
setting bodies or industry practices if consistent with the above steps
Consistency of Accounting Policies ndash IAS 8
If one or more alternative methods are available
Choose and apply one method for the consolidated entity For all transactionitems or
If expressly permitted for all transactionsitems etc in a category of items
If expressly permitted on a transaction by transaction basis
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
Compliance with IFRS
Compliance with IFRS includesAll active standards (IASs and IFRSs)All active interpretations (SICs and IFRICs)IFRS requires presentation of comparative
periodMust make explicit and unreserved statement
of compliance
The Good the Bad and the Ugly
The goodndashYou know more about IFRS than you think Many areas are similar to US GAAP
The badndashThere are significant areas of difference New way of thinking about standards
Just plain uglyndashThere has been historically lax practices in applying IFRS (ldquoIFRS literdquo)
Overview of Key ConceptsConcept DiscussionAccounting policies Specific principles bases
conventions rules and practices
Estimates Adjustments in the carrying amount of assets or liabilities
Result from new information or developments
Errors Material omissions or misstatements in financial statements
Include clerical errors mistakes in application oversight or misinterpretation of facts fraud
Material Omissions or misstatements that individually or collectively influence
the economic decisions of usersConsider the size and nature of the
item
IFRS Accounting Policies ndash IAS 8
IAS 8 established ldquohierarchyrdquo when choosing IFRS accounting policies
1Apply any specific IFRS consider any relevant implementation guidance
2Refer to other IFRSs dealing with similar or related issues
3IFRS Framework4Consider pronouncement of other standard-
setting bodies or industry practices if consistent with the above steps
Consistency of Accounting Policies ndash IAS 8
If one or more alternative methods are available
Choose and apply one method for the consolidated entity For all transactionitems or
If expressly permitted for all transactionsitems etc in a category of items
If expressly permitted on a transaction by transaction basis
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
The Good the Bad and the Ugly
The goodndashYou know more about IFRS than you think Many areas are similar to US GAAP
The badndashThere are significant areas of difference New way of thinking about standards
Just plain uglyndashThere has been historically lax practices in applying IFRS (ldquoIFRS literdquo)
Overview of Key ConceptsConcept DiscussionAccounting policies Specific principles bases
conventions rules and practices
Estimates Adjustments in the carrying amount of assets or liabilities
Result from new information or developments
Errors Material omissions or misstatements in financial statements
Include clerical errors mistakes in application oversight or misinterpretation of facts fraud
Material Omissions or misstatements that individually or collectively influence
the economic decisions of usersConsider the size and nature of the
item
IFRS Accounting Policies ndash IAS 8
IAS 8 established ldquohierarchyrdquo when choosing IFRS accounting policies
1Apply any specific IFRS consider any relevant implementation guidance
2Refer to other IFRSs dealing with similar or related issues
3IFRS Framework4Consider pronouncement of other standard-
setting bodies or industry practices if consistent with the above steps
Consistency of Accounting Policies ndash IAS 8
If one or more alternative methods are available
Choose and apply one method for the consolidated entity For all transactionitems or
If expressly permitted for all transactionsitems etc in a category of items
If expressly permitted on a transaction by transaction basis
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
Overview of Key ConceptsConcept DiscussionAccounting policies Specific principles bases
conventions rules and practices
Estimates Adjustments in the carrying amount of assets or liabilities
Result from new information or developments
Errors Material omissions or misstatements in financial statements
Include clerical errors mistakes in application oversight or misinterpretation of facts fraud
Material Omissions or misstatements that individually or collectively influence
the economic decisions of usersConsider the size and nature of the
item
IFRS Accounting Policies ndash IAS 8
IAS 8 established ldquohierarchyrdquo when choosing IFRS accounting policies
1Apply any specific IFRS consider any relevant implementation guidance
2Refer to other IFRSs dealing with similar or related issues
3IFRS Framework4Consider pronouncement of other standard-
setting bodies or industry practices if consistent with the above steps
Consistency of Accounting Policies ndash IAS 8
If one or more alternative methods are available
Choose and apply one method for the consolidated entity For all transactionitems or
If expressly permitted for all transactionsitems etc in a category of items
If expressly permitted on a transaction by transaction basis
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
IFRS Accounting Policies ndash IAS 8
IAS 8 established ldquohierarchyrdquo when choosing IFRS accounting policies
1Apply any specific IFRS consider any relevant implementation guidance
2Refer to other IFRSs dealing with similar or related issues
3IFRS Framework4Consider pronouncement of other standard-
setting bodies or industry practices if consistent with the above steps
Consistency of Accounting Policies ndash IAS 8
If one or more alternative methods are available
Choose and apply one method for the consolidated entity For all transactionitems or
If expressly permitted for all transactionsitems etc in a category of items
If expressly permitted on a transaction by transaction basis
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
Consistency of Accounting Policies ndash IAS 8
If one or more alternative methods are available
Choose and apply one method for the consolidated entity For all transactionitems or
If expressly permitted for all transactionsitems etc in a category of items
If expressly permitted on a transaction by transaction basis
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
IFRS Timeline
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
What will happen
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
IFRS Solution
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
Why world going IFRS
IFRS will integrate domestic businesses with the global investor Financial community so that there is no language gap and barrier IFRS is acceptable globally and provides a common accountingreporting language to the world
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
What are some of the most important specific differences between IFRS and US GAAP
Because of longstanding convergence projects between the IASB and the FASB the extent of the specific differences between IFRS and GAAP has been shrinking Yet significant differences do remain most any one of which can result in significantly different reported results depending on a companys industry and individual facts and circumstances For examplebull IFRS does not permit Last In First Out (LIFO)bull IFRS uses a single-step method for impairment write-downs rather than the two-step method used in US GAAP making write-downs more likelybull IFRS has a different probability threshold and measurement objective for contingencies bull IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
Structure of IFRS(1) IFRS are considered a principles based set of
standards in that they establish broad rules as well as dictating specific treatments
International Financial Reporting Standards (IFRS) - standards issued after 2001
International Accounting Standards (IAS) - standards issued before 2001
International Financial Reporting Standards comprise
Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
Standing Interpretations Committee (SIC) - issued before 2001
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
A Principles-based Approach
Less detailed guidance to consider More of a focus on the ldquosubstancerdquo of
transactions Evaluate whether the accounting presentation
reflects the ldquoeconomic realityrdquo
More use of professional judgment Impact on risk Possibility of second-guessing by regulators
More of a focus on the ldquoprocessrdquo around making judgments
CIFR recommendations
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
Other Accounting Policy Considerations In considering the applicability of US
GAAP pronouncements must consider consistency with the overall IFRS ldquoprinciplerdquo
Generally no ldquobright linesrdquondashNeed to establish ldquobenchmarksrdquo for analysis
Transitional provisions in US standards and interpretations may not be applicable under IFRS
On first-time adoption would need to apply retrospectively unless related to exemption
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
Sources 1-NYSCPAorg2-aicpaorg3-IFRSorg4-iasborg5-Wikipediaorg6-CFOorg
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