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The development of IFRS and its application, controversy and prospects in the EU and
the UK
Beijing22 January 2008
2
Isobel Sharp
President, The Institute of Chartered Accountants of Scotland
Member, IASB Working Group
Member, UK Accounting Standards Board 2000 – 2005
Author, Various IFRS Financial Statements textbooks
3
The development of IFRS
• International Acounting Standards Committee established in 1973
• New International Accounting Standards Board established in 2001
• IFRS accepted or required in 111 countries
• Expected to rise to 150 countries by 2011
5
IFRS application
• Asia – China leading the way
• Japan, India, South Korea
• Americas- Canada 2011- Brazil 2010- USA?
• Global single set of high quality accounting standards
6
IFRS controversy and prospects
• Impact if USA agrees to move to IFRS?
• USA – almost half a million pages of authoritative accounting guidance
• Principle-based high level standards v detailed rule books
• Focus on the “true and fair view”?
7
IFRS controversy in Europe
• Complicated approval process in Europe
• Political pressure
• Delaying approval of new IFRSs
8
IFRS controversy in Europe
Two routes
EC RegulationNo 1606/2001
National GAAP
Required for consolidated financial statements for
listed securities companies
Based on EU 4th and 7th Company Law Directives –
subject to change via Directives
National jurisdictions could require/allow others (single companies or consolidated)
to move to IFRS
National jurisdictions may wish to move to IFRS over
time
12
IFRS controversy in Europe
• Proposed IFRS for Small and Medium-sized Entities
• Applicable to non-publicly accountable entities
• 400 v 3000 pages
• Final IFRS by end 2008
13
IFRS prospects
• Great success so far
• Asia extremely important, with Europe divided and USA coming in
• ICAS very excited about co-operation with CICPA