Inside IFRS March 25 Overview of IFRS Draft FINAL With Bios

7/31/2019 Inside IFRS March 25 Overview of IFRS Draft FINAL With Bios

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PresentsPresents

An Overview of IFRSAn Overview of IFRSA Webinar Hosted By Deloitte

March 25, 2009

1:00 PM

An Overview of IFRSAn Overview of IFRSAn Overview of IFRS

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CPE Credit Requirements

CMAs & CFMs can report 1-hour of CMA-approved CPEfor todays event if you: Have registered for this event Participate in Live Inside IFRSWebinar Respond to all polling questions Complete evaluation during Q & A

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Welcome & Introduction

Dr. Raef Lawson

VP of Research andProfessor-in-Residence

Institute of ManagementAccountants


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Featured Presenter

D.J. Gannon

Partner, Audit andEnterprise Risk Services

Deloitte & Touche LLP


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D.J. Gannon - Bio

In July 2000, D.J. Gannonjoined Deloitte & Touche LLP as apartner where he specializes in international accounting andfinancial reporting, as well as global regulatory and professionalissues.Mr. Gannon is the leader of the International Financial ReportingStandards (IFRS) Centre of Excellence for the Americas region.Prior to that he was the leader of International Financial AccountingServices, a group within the organizations Global IFRS andOfferings Services Group that assists companies in implementing orconverting to International Financial Reporting Standards (IFRS).Mr. Gannon is chairman of the American Institute of Certified PublicAccountants International Practices Task Force and the AICPAsAccounting Standards Executive Committees Short-TermInternational Convergence Task Force. He is a Certified PublicAccountant in the District of Columbia and a member of theAmerican Institute of Certified Public Accountants. He is active inspeaking and writing on a variety of global financial reporting topics.


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Featured Presenter

Randall Sogoloff

Partner, Audit andEnterprise Risk Services

Deloitte & Touche LLP


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Randall Sogoloff - Bio

Randall Sogoloff is a partner in the National Office of Deloitte &Touche LLP in Wilton, Connecticut (USA). His role involvesdeveloping firm accounting guidance, responding to standard-settingproposals, and providing accounting consultation services.Randall is also a participant in Deloittes Global IFRS LeadershipTeam and part of Deloittes IFRS Centre of Excellence for theAmericas region. He specializes in the accounting for leases,consolidation, and income taxes under both International FinancialReporting Standards and U.S. GAAP.Randall is also a member of the AICPAs Accounting StandardsExecutive Committee (AcSEC).

Randall is Certified Public Accountant (CPA) in the States of Floridaand Connecticut.Randall has been a frequent speaker at seminars, conferences, andexecutive-level meetings and has authored articles in accountancyand finance periodicals, including Journal of Accountancy,Derivatives Financial Products Report, and Deloitte Heads Up.


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AgendaBackground and Regulatory Developments

Global move towards IFRS

Recent SEC activity

Early adoption provisions

IFRS for non publicly accountable entities

IFRS Implementation Considerations

Key impacts of IFRS implementation

IFRS 1 considerations

Key benefits of IFRS adoption

Lessons learned

Wrap-up

Copyright 2009 Deloitte Development LLC. All rights reserved.


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Learning Objectives

Upon completing this webinar, you will be able to:

Describe the global momentum toward IFRS identifythe regulatory background of IFRS and recent SECactivity

Follow the proposed timelines for transition and earlyadoption options

Discuss the First Time Adoption considerations of IFRS

Summarize the IASBs project on IFRS for PrivateEntities

Understand key benefits of IFRS adoption and lessonslearned to date



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Background and Regulatory

Developments



The Global Move Towards IFRS

Europe2005

Australia2005

Canada2009/11

South Africa2005

United States

(2009-14?)

Current or anticipated requirement

or option to use IFRS (or equivalent)

Brazil2010

China

2007

India2011

Chile2009

Japan(?)

Mexico

2008/12



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IFRS Today and Tomorrow

Today, IFRS is used in more than 100countries: Required for all listed companies in EU

countries, starting in 2005 Argentina, Brazil, Canada, Chile, India,

Korea, and Mexico all have announcedmandated use

Japan currently considering allowing IFRSbeginning 2010, with a requirement in 2015

FPIs can now use IFRS in the U.S. SEC Roadmap contemplates use of IFRS

beginning in 2014

By 2011, it is expected that: All major countries will have adopted IFRS to

some extent Certain U.S. public companies will have the

option to use IFRS SEC decision on IFRS mandate for all U.S.

public companies

196188

116

0

50

100

150

200

250

2007

U.S GAAP IFRS Other

Account ing Standards Usedby Global Fortune 500

About 40% of t he Globa l For tune

500 Companies cur rent ly use I FRS.

That number is expec ted to grow as

more count r ies adopt IFRS over t he

nex t f ew years .



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What is IFRS?

IFRS is a set of established accounting standards that is rapidlygaining worldwide acceptance

Standards are promulgated by the London-based InternationalAccounting Standards Board (IASB)

IASB includes representatives from major countries, including theU.S.

Generally more focused on objectives and principles and less relianton detailed rules and interpretations than U.S. GAAP

IFRS currently consists of a single volume of approximately 40

standards and 25 interpretations

Standards include IASs and IFRSs

Interpretations include SICs and IFRICs



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Summary of Proposed Rule on Early Use of IFRS

Provides information on how to assess eligibility

Instructs issuers to submit their criteria for eligibility to the Division of

Corporate Finance and receive a letter of no objection permitting the

use of IFRS

Must prepare financial statements using IFRS, as issued by the IASB

Must provide three years of financials in the year of adoption

Proposes alternatives on providing additional U.S. GAAP financial

information

Proposes amendments to the rules and regulations

Establishes a new class of issuer an IFRS Issuer

Proposed new Article 13 of Regulation S-X

Addresses other disclosure issues such as Guide information

May not use IFRS for the first time in quarterly reports, IPOs, proxy orinformation statements

Not impact filing dates



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Poll Question #2

By 2014, what percentage of total eligible U.S.public companies do you believe will have usedthe early adoption option?

A. Less than 10%

B. Between 10% and 25%

C. Between 26% and 50%

D. Between 51% and 75% E. Between 76% and 90%

F. Substantially all



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IFRS for Non Publicly Accountable Entities

Modifies the full set of IFRS

Self-contained principles

based standard

Topics irrelevant to private

entities omitted

Simplifies the recognition and

measurement principles

Less fair value measurement

Simplifies policy alternatives

Simplifies transition from US

GAAP

Reduces f i nanc ia l repo r t ing bu rden fo r sma l l and med ium en te rp r i ses

Back g r ou nd Ov er v iew o f Ex posu r e Dr a f t

IASB issued an Exposure Draftof IFRS for NPAEsin Feb.07

and proposed to issue the finalstandard in the 2009

Any entity that publishes general

purpose financial statements for

external users and does nothave public accountability can

use the IFRS for NPAEs.



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IFRS ImplementationConsiderations



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Illustrative Adoption Timeline

Al ignment w i th o ther in i t ia t ives and t ra in ing fo r appropr ia te personne l

IFRS

com

petence

Rat iona l izat ion and s tandard iza t ion o f s ta tu t ory repor t ing

Trans i t ion date

Repor t ing date

2 0 0 9

2 0 0 9 2 0 1 0

2 0 1 0 2 0 1 1

2 0 1 2 2 0 1 3

2 0 1 4

Awareness Assessment Plann ing

I n i t ia l Tra in ing Roadmap

TargetedSta tu toryI m p l e m e n t a t i o n

Sys tem &Process

redes ign

Statu toryI m p l e m e n t at i o n

SelectExempt ions

Prepare I FRSOpening BS

Dry Runs

U.S. GAAP & I FRSopen ing ba lance

I n v e s t o rCommunica t ions

Audi t P rocedures Change

Standards

Trans i t ion toI FRS

Quar ter lyRepor t ing

I n v e s t o r

Communica t ions



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First-time Adoption of IFRS Overview

General RequirementsExemptions from Retrospective

ApplicationImplementation Considerations

Primary standard IFRS 1

Applicable when an entity makesits first explicit and unreservedreference to IFRS

Guidance addresses the processaround adopting IFRS for thefirst-time; generally apply allIFRS effective at the reportingdate retrospectively

Provides certain electiveexemptions from retrospectiveapplication; some exceptionsfrom retrospective applicationmust be followed, including useof estimates, hedging andderecognition of financial assets

Only requires one year ofcomparative financial information

Effect of transition adjustments isrecognized in retained earnings

Requires a reconciliation ofequity and income; narrativediscussion of transitionadjustments

Business combinations

Fair value as deemed cost

Employee benefits reset ofcorridor

Cumulative translation adjustments

Compound financial instruments

Subsidiary, associate and jointventure reporting

Designation of previously recognizedfinancial instruments

Share-based payment transactions

Insurance contracts

Decommissioning, restoration andsimilar liabilities

Leases may follow IFRIC 4

Key dates such as the reporting dateof the companys first IFRS financialstatements, and the transition date toIFRS

The overall approach to IFRSimplementation

Differences between existingaccounting policies and IFRS

Areas where extensive disclosureswill be required

Election and application of optionalexemptions; application of mandatoryexceptions

Processes and data capture aroundfirst-time adoption will need to bedeveloped

Key Quest ions to Ask What are the repor t ing and t r ans i t ion dates? What vo lun t ary e lec t ions f rom re t rospec t ive app l ica t ion have we

made? Are the cur rent in fo rm at ion sys tems capab le o f captur ing the

in form at ion necessary fo r f i r s t - t ime adopt ion o f I FRS?



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Poll Question #3To what extent have you been involved in IFRS scopingand planning discussions?

A. Scoping and planning activities have not beeninitiated

B. No involvement

C. Participate in a passive role

D. Actively participate, looked upon as subject matterexpert



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Key Benefits of IFRS Adoption

St ream l in ing f i nanc ia l repo r t ing p rocess th roug hou t g loba lope ra t ion e l im ina t es d ive rgen t accoun t ing sys tem, enab lesg rea te r cons is tency resu l t i ng in reduced costs & inc reasedope ra t iona l e f fec t i veness

ReducedComp lex i t y

Compan ies a lso may need to conve r t to I FRS i f they a re asubs id iary o f a fo re ign company tha t m us t use I F RS, o r i ft hey have a fo re ign inves to r tha t m us t use IF RS

I m p r o v e dTransparency

P resen ta t ion o f f i nanc ia l s ta temen ts on the same bas is as i t sfo re ign compe t i t o rs mak ing compa r isons eas ie r

EnhancedComparab i l i t y

Greater m arket e f f ic ienc ies can be rea l ized. I FRS encouragesbo th compan ies and inves to rs t o have eas ie r access tom u l t i p l e / f o r e ig n m a r k e t s t h u s s t i m u l a t i n g i n v es t m e n t a n dcross border cap i ta l f low

I nc reasedEff ic iency

Compan ies w i th subs id ia r ies in coun t r ies th a t requ i re o rpe rm i t I FRS may be ab le to use one accoun t ing languagec o m p a n y - w i d e

GreaterCons is tency



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Lessons Learned The Rear View Mirror

Views ofpreparers,users, andauditors

Most EU investors believe IFRS has improved the quality of consolidated financialstatements

Large multinational companies that rely more heavily upon equity financingperceive the benefits of IFRS to be greater than other companies

Larger companies in the EU converted earlier and devoted considerable resourcesto educating and training their boards, staff, and investors

Views ofCFO/CIO

organizations

Systems impacts of IFRS conversions were underestimated Its not just about accounting, its about the Process, People, Controls and

Technology

Lessonslearned from

IFRSconversions

Primary lesson learned is not to treat IFRS as a purely technical accountingexercise

Effort to convert was often underestimated Lead time from announcement to reporting date was short Late start to converting often resulted in escalation of costs, especially after

transition date Many companies did not achieve a stable state for IFRS reporting Often companies neglected to take a holistic approach towards IFRS conversion

resulting in an imperfect conversion effort

Reaction ofsecuritiesmarkets

In the EU, there is widespread agreement that IFRS has made financial statementseasier to compare across countries and competitors



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Wrap-up



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Poll Question # 4Which of the following do you think would be the mostsignificant area in IFRS for management accountants?

A. Analyzing the impact of IFRS on financial reporting

B. Assessing the impact of IFRS on working capital, ratios and

capital budgeting decisions

C. Discussion on accounting policy choices with management

D. Focus on technical accounting differences

E. Technology changes due to IFRS implementation

F. All of the above

G. None of the above



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Suggested Near-Term Action StepsAction Step Immediate Benefits Long Term Benefits

Develop and analyze statutory

reporting baseline

Immediate understanding on statutory

reporting requirements, processes, and

related resources, and the existing

implications of IFRS

Reduced costs due to increased

standardization and centralization of

statutory reporting

Analysis of initial accounting

implications of IFRS

Immediate high-level understanding of

the impact of IFRS adoption on your

financial statements

Reduced risk of error or surprises in the

ultimate conversion to IFRS

Preliminary analysis of significant

IFRS tax provision and planning

implications


the impact of IFRS adoption on your

significant US and foreign tax positions

Identification of significant tax issues

important in planning for conversion and

developing a roadmap to readiness

High level impact analysis (process,

systems) and related workshops


specific IFRS impacts on your processes,

technologies, and other businessactivities

Provide realistic estimate regarding long-

term effort of IFRS implementation

Increased executive consensus and

reduced risk of surprises

Technical training sessions Increase exposure and knowledge of key

finance resources or IFRS standards

Increased knowledge and familiarity of

team regarding IFRS requirements

Consideration of IFRS impact on

specific long-term finance initiatives

High-level assessment of IFRS

implications on company-wide finance or

major system initiatives

Reduced risk of IFRS-related surprises

as long-term financial initiatives are

completed



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Questions & AnswersUse theQ & A Panel to send your questions to our panelists

Dr. Raef LawsonVP of Research and

Professor-in-ResidenceInstitute of

Management Accountants

D.J. GannonPartner, Audit and

Enterprise Risk ServicesDeloitte & Touche LLP

Randall SogoloffPartner, Audit and

Enterprise Risk ServicesDeloitte & Touche LLP


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Thank You to Our Featured Presenters

D.J. GannonPartner, Audit and

Enterprise Risk ServicesDeloitte & Touche [email protected]

Randall SogoloffPartner, Audit and

Enterprise Risk ServicesDeloitte & Touche [email protected]


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Inside IFRS2009 Calendar of Events!

IFRS Financial Reporting LiabilitiesNovember 2009

(tentative)

IFRS Financial Reporting Assets and RevenueSeptember 23, 2009

IFRS Financial Reporting EntitiesAugust 13, 2009

IFRS Financial Reporting Presentation ConsiderationsMay 20, 2009

New IFRS Course Package

IMA IFRS Series: Embracing IFRS: A Background Primer

2 NASBA-approved CPE Credits

www.imanet.org/cpe


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Documents

Inside IFRS March 25 Overview of IFRS Draft FINAL With Bios