IFRS ReadinessIFRS Readiness Tracking Survey

May 2010

1

Survey BackgroundSemi-annual survey • Conducted 4/20 through 5/7, 2010• 3588 responses – 3191 qualified (BI or Public Practice member)3588 responses 3191 qualified (BI or Public Practice member)

- 596 from US Public Companies- 739 from US Private Companies- 180 from Foreign Public Companiesg p- 125 from Foreign Private Companies- 127 from Not for profit or educational institutions- 1414 from Public Practice

In addition to tracking questions, contains a number of questions unique to this surveyMeasures members readiness to implement IFRSProvides information on their views surrounding other issuesProvides information on their views surrounding other issues related to IFRS adoption

American Institute of CPAs2

Key Messages from IFRS Readiness SurveyMay 2010May 2010

Familiarity with IFRS has increased since September 2009• Members also expressed a need for more advanced IFRS knowledgeMembers also expressed a need for more advanced IFRS knowledge• 27% said they need increased knowledge in the next year, an

additional 37% said they need increased knowledge in the next 2 to 3 years

Companies have made some progress in moving toward adoptionCompanies have made some progress in moving toward adoption• However, respondents indicated they are delaying implementation while

waiting for SEC actionMembers support• Adoption of IFRS, although more convergence is desired first• Members believe a 2015-2016 adoption date would allow enough time for

implementation, if the SEC decides in 2011 to require IFRSOnly about half of respondents were aware of IFRS for SMEsOnly about half of respondents were aware of IFRS for SMEs • In addition, 47% said they were unsure if they would consider adopting

IFRS for SMEs

American Institute of CPAs3

Current Familiarity with IFRSCurrent Familiarity with IFRSAll Members

45%

50%

35%

40%

45%

20%

25%

30%

5%

10%

15%

0%

5%

NA None Basic Some Advanced Expert

Oct 08 Mar 09 Sep 09 May 10

American Institute of CPAs

Oct 08 Mar 09 Sep 09 May 10

4

N d d F ili it ith IFRSNeeded Familiarity with IFRSAll Members

30%

25%

30%

15%

20%

%

10%

0%

5%

NA None Basic Some Advanced Expert

American Institute of CPAs

NA None Basic Some Advanced ExpertOct 08 Mar 09 Sept 09 May 10

5

Familiarity with IFRSCurrent vs NeededCurrent vs NeededAll Members

%

50%

35%

40%

45%

20%

25%

30%

10%

15%

20%

0%

5%

NA None Basic Some Advanced Expert

American Institute of CPAs

Current Needed

6

Familiarity with IFRSyUS Public Co Members

70%

Current vs Needed

C tMembers who work for US Public Co’s are more

20%30%40%50%60%70% Current

Neededlikely to need advanced or expert levels of familiarity but few have it.

However overall familiarity of the members has not changed since October 08

Expectations for Needed Familiarity are also fairly

0%10%

NA None Basic Some Advanced Expert

stable

60%70%

Current FamiliarityOct 08

Mar 09

Sept 09

50%60%70%

Needed Familiarity Oct 08

Mar 09

Sept 09

0%10%20%30%40%50% May 10

0%10%20%30%40%50% May 10

0%NA None Basic Some Advanced Expert

0%NA None Basic Some Advanced Expert

7

Familiarity with IFRSUS Private Co Respondentsp

60%70%

Current vs Needed Familiarity

Current

Members who work for US Private Cos generally have less familiarity with IFRS than they need

However familiarity has been growing consistently

10%20%30%40%50%60%

Needed

y g g ysince October 08

After the anomaly in the last survey the number of respondents who think IFRS knowledge is not applicable has fallen back in line with previous surveys

0%NA None Basic Some Advanced Expert

Needed Familiarity

Members expectations for what they think they will need show a small increase in the level of knowledge required

40%

50%

60%

70%Current Familiarity

Oct 08

Mar 09

Sept 09

May 10 40%

50%

60%

70%

Needed Familiarity

Oct 08

Mar 09

Sept 09

May 10

0%

10%

20%

30%

0%

NA None Basic Some Advanced Expert0%

10%

20%

30%

40%

NA None Basic Some Advanced Expert

May 10

NA None Basic Some Advanced Expert NA None Basic Some Advanced Expert

8

Familiarity with IFRSF i O d C M bForeign Owned Co Members

60%

70%

Current vs Needed

Current

Like their US counterparts members who work for Foreign companies generally have less familiarity with IFRS than they need

H b h k f f i t i

10%

20%

30%

40%

50%

60% Needed However members who work for foreign countries are more familiar with IFRS than their US company counterparts

The same can be said for the change in what members expectations are for what they think they will need

0%

10%

NA None Basic Some Advanced Expert

Needed Familiarity Oct 08

will need

40%

50%

60%

70%

Current FamiliarityOct 08

Mar 09

Sept 09

May 10 40%

50%

60%

70%Needed Familiarity Oct 08

Mar 09

Sept 09

May 10

0%

10%

20%

30%

40%

NA None Basic Some Advanced Expert0%

10%

20%

30%

NA None Basic Some Advanced ExpertNA None Basic Some Advanced Expert NA None Basic Some Advanced Expert

9

Familiarity with IFRSPublic Practice MembersPublic Practice Members

60%70%

Current vs Needed

Current

Members who work for Public Practice continue to have less familiarity with IFRS than they need

The percentage of members with at least basic

10%20%30%40%50%60% Needed The percentage of members with at least basic

familiarity has continued to increase. Members expectations for what they think they

will need have remained stable

0%10%

NA None Basic Some Advanced Expert

50%60%70%

Current Familiarity

Oct 08

Mar 09

Sept 09 40%50%60%70%

Needed Familiarity

Oct 08

Mar 09

Sept 09

0%10%20%30%40%

NA None Basic Some Advanced Expert

Sept 09

May 10

0%10%20%30%40%

NA None Basic Some Advanced Expert

May 10

p p

10

Who Needs Advanced & Expert Knowledge ofWho Needs Advanced & Expert Knowledge of IFRS?By type of organization

70%

Percent that need Advanced or Expert Knowledge 

50%

60%

30%

40% Mar‐09

Sep‐09

10‐May

0%

10%

20%

American Institute of CPAs

0%US Public Co US Private Co Public Practice Foreign Owned 

11

When is IFRS knowledge Needed?By type of organization

70%

50%

60%

30%

40% US Public Co

US Private Co

Public Practice

%

20%

3 Public Practice

Foreign Owned 

0%

10%

Now Within the next year

In the next 2 to 3 yrs

In more than 3 yrs Not sure

American Institute of CPAs

year yrs

12

Prepared to Adopt?B t f i ti

Please rate the extent to which your company (firm) is prepared for IFRS adoption

By type of organization

70%

50%

60%

30%

40%

10%

20%

0%NA -- No plans Still evaluating Adopting/Not Begun Preliminary Discussions Actively Preparing Ready

American Institute of CPAs

US Public Co US Private Co Public Practice Foreign Owned

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Prepared to Adopt/Support Adoption?

60%

70%

US Public Companies

Oct 08

Most US Public companies have not changed their position

The exception is a small number moving

20%

30%

40%

50%

60%Mar 09

Sept 09

May 10

The exception is a small number moving into Active Adoption phase

US Private Companies are still not planning to adopt or only in early stages

Most public practice firms are still not prepared for IFRS adoption but there has been an increase in

0%

10%

NA Evaluating Adopting not begun

Preliminary Discussions

Active Ready

US P i t C i P bli P ti

for IFRS adoption but there has been an increase in the number of respondent who indicate their firm is ready

40%50%60%70%

US Private Companies

Oct 08

Mar 09

Sept 0940%

50%

60%

70%

Public Practice

Oct 08

Mar 09

Sept 09

-10%0%

10%20%30%

NA Evaluating Adopting, not begun

Preliminary Discussions

Active Ready

May 10

0%

10%

20%

30%

NA Evaluating Adopting, Preliminary Active Ready

May 10

not begun Discussions

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Stage of Transition?Please select the stage of transition that best describes the status of your implementation. (Asked only of companies in the Preliminary Discussions or Actively Preparing phase)

70%

Discussions or Actively Preparing phase)

50%

60%

30%

40% US Public Co

US Private Co

Foreign Owned

10%

20%

0%

10%

Initial Heavy Planning Diagnostic Design Implementation Parallel Reporting

Completed

American Institute of CPAs15

IFRS Implementation Challenges

What are the largest challenges that implementing IFRS has presented/will present to your firm/company? (Select all g

All Members

Other

that apply)

Updating auditing policies

Managing transition

Updating/changing IT systems

Educating the Public/Managing public perception

Updating accounting policies

Educating non-CPAs/non-financial staff

Educating clients

0% 10% 20% 30% 40% 50% 60% 70% 80%

Educating CPAs/financial staff

Public Practice B&I

American Institute of CPAs

Public Practice B&I

16

IFRS for Small & Medium sized Entities?

Are you aware that the IASB issued an International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs), which is a simplified, self-contained set of accounting standards designed to meet Medium-sized Entities?

US Public Companies Foreign‐owned Companies

g gthe financial reporting needs of constituents of private entities?

56%

44%Yes

No

64%

35%Yes

No64%

Public Practice

50%

US Private Companies

Yes

N 51%49%

Public Practice

Yes

No50%

50% No 51% No

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Adopt IFRS for SMEs? Would you consider adopting/would you advise your clients to consider adopting the IASB’s recently issued IFRS for Small and Medium-sized entities?

14%

0%

US Private CompaniesYes

Yes, but only if IFRS is required for public companies

Most respondents working for US entities are unsure about IFRS for SMEs.

Respondents working for foreign

15%

18%

52%

No 

Unsure

Al d U IFRS

p g gcompanies are more certain but are about as equally likely to be positive as to be negative

Already Use IFRS

Foreign‐owned  Private Companies Public Practice Yes

24%12%

g p

Yes

Yes, but only if IFRS is required for public companies

10%

16%

9%

Public Practice Yes

Yes, but only if IFRS is required for public companiesNo

10%

28%

26%No 

Unsure

Already Use IFRS

14%51%

No 

Unsure

Does not Apply

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Should the SEC Require Adoption of IFRS?

On February 24, 2010, the SEC outlined a work plan for the continued consideration of whether and how to incorporate IFRS into the U.S. issuers. The work plan contemplates a 2011 decision on whether to require orAdoption of IFRS? contemplates a 2011 decision on whether to require or permit IFRS. Do you believe ultimately the SEC should require adoption of IFRS for U.S. public companies?

18%

7%8%

US Public Companies Yes

Yes, only after convergence 34%11%

3%9%

Foreign‐owned CompaniesYes

Yes, only after convergence

50%

18% No, but IFRS should be an option

No 

Unsure

42%

11%No, but IFRS should be an optionNo 

Unsure

16%8%

Private Companies

Yes 18%7% 16%

Public PracticeYes

Yes, only after 16%

42%17%

7%

18%Yes

Yes, only after convergenceNo, but IFRS should be an optionNo 

42%18%

convergence

No, but IFRS should be an option

No 

Unsure Unsure

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Does timeline allow enough time for implementation?

If the SEC makes a decision in 2011 to require or permit use of IFRS for public companies, it believes the first time U.S. companies would report under the system would be 2015 or 2016. Do you believe this timeline will allow time for implementation?

US Public Companies Foreign‐owned Companies

yenough time for implementation?

56%13%

30%Yes

No

Unsure

3% 19% Yes

No

Unsure13%77%

Unsure

Public Practice

32%

US Private Companies

Yes

No30%

Yes

No

58%

10%

Unsure 60%10%

Unsure

20

Delaying IFRS Preparations?

Are you delaying IFRS preparations until the SEC announces that it will set a date certain for its adoption in the United States? Preparations?

60 0%

70.0%US Public Companies

Sept 09

May 1060.0%

70.0%

Foreign‐owned Companies

Sept 09

20.0%

30.0%

40.0%

50.0%

60.0% May 10 

10 0%

20.0%

30.0%

40.0%

50.0% May 10

0.0%

10.0%

Yes No Not applicable-10.0%

0.0%

10.0%

Yes No Not applicable

50.0%

60.0%

70.0%

US Private Companies

Sept 09

May 10

40.0%

50.0%

60.0%

70.0%

Public Practice

Sept 09

May 10

10.0%

20.0%

30.0%

40.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

Yes No Not applicable

0.0%Yes No Not applicable

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Reaffirmation of convergence?

Are you aware that the International Accounting Standards Board (IASB) and the U.S. financial Accounting Standards Board (FASB) have reaffirmed their commitment of achieving accounting convergence and have agreed to intensify their efforts to complete each major joint convergence? g y p j jproject described n their Memorandum of Understanding by June 2011?

1%

Foreign‐owned  Private Companies

Yes0%

US Public Companies

Yes

70%

18%

11%No 

Unsure

14%

8%

Yes

No 

Unsure

Public Practice

70%

Other

77%Unsure

Other

8%

1%

US Private CompaniesYes

No 26%

10%

0%

Public Practice

Yes

No 

63%

29%

No 

Unsure

64%

26%

Unsure

Unsure

Other

Unsure

22

Respondent DemographicsAll MembersAll Members

Respondents by Organization TypeMultinational Company (B&I)?

23%

6%

26%

Yes

No

19%

6%

4%

4%0%

74%

44%

74%

Multinational Firm (PA)?

Yes

NPublic Practice US Owned Public Co

US Owned Private Co Foreign Owned Public co

Foreign Owned Private Co Not for Profit

Other

26%

74% No

23

Organization Size

2%

4% 4%

US Public Companies $0 to under $10M

$10M to under $50M5%

9% 4%

Foreign‐owned Companies$0 to under $10M

$10M to under $50M

$ $

10%

10%

29%

11%

29%$50M to under $100M

$100M to under $500M

$500M to under $1B

$1B to under $5B

9%

16%

10%19%

8%

29%$50M to under $100M

$100M to under $500M

$500M to under $1B

$1B to under $5B

29%$5B to under $10B

over $10B

19%$5B to under $10B

over $10B

20%6% 9%

2% 2%US Private Companies $0 to under $10M

$10M to under $50M

$50M to under $100M

$100M to under $500M 37%31%

Public PracticeLess than $3M

$3M to under $6M

$ d $

28%

13%

19%

$100M to under $500M

$500M to under $1B

$1B to under $5B

$5B to under $10B12%7%

8%5%

$6M to under $10M

$10M to under $20M

$20M to under $40M

over $10B Over $40M

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