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
13
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
14
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
17
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
19
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
21
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
24