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