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Anthony P. Pencek, CPA IMA NERC-Mystic, CT September 20, 2010
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International Financial Reporting Standards (IFRS) vs. US Generally Accepted Accounting Standards (GAAP)
What does it mean for you?
Convergence!!!!
Dictionary Definition: Convergence means to tend or move toward a common point or result. Goal Comparability and Consistency
TOMORROW
By
100 countries around the world require or permit the use of some form of IFRS the EU for all listed companies in
Mandatory
Permitted
for non-listed companies in some member states used in Central and Eastern Europe, in Russia and many Caribbean Nations countries have moved to IFRS, including Australia, South Africa, Singapore and New Zealand
Commonly
2011, it is expected that all major countries will have adopted IFRS to some extent China and Japan will be substantially converged to IFRS Substantial majority of Global Fortune 500 will report under IFRS Others recently announced implementation programs, such as Canada, Korea and Israel
Approximately
Many
1/3 of US Foreign Private Issuers are in Canada major NON-US Capital Markets are impacted
All
2011-2014 2015 Choose IFRS 1 options Make policy choices Restate /reaudit Issue financial statements
SEC Chief Accountant article regarding progress on P reconciliation for foreign filers convergence
Roundtable discussions held on the impact of IFRS on US Capital Market SEC holds roundtablesfor elimination of the reconciliation overwhelming support discussions
Summer 2007
November 2007
SEC eliminates the issued for comment, allowing US issuers theto US to use IFRS requirement for reconciliation option GAAP Concept Release to FPI s using IFRS as adopted by IASB
Approved proposal to eliminate the reconciliation to US GAAP for foreign filers, SEC issues initial roadmap effective immediately
August 2008
February 2010
Research & Development costs get capitalized, costs of drugs in Canada. Impairment of Write downs to Net Realizable Value is a single step process for IFRS while US GAAP uses a two step process. Making the write down more easily. Write Up of Intangibles Possible.
Reasonable estimate, impairment has occurred.
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Limitation of IFRS
Pick and Choose which standards to be enforced or used by companies within its borders by government -French Government recently voted to allow certain industries, the wine industry to be exact, to sidestep certain IFRS standards to help that industry. -Japans Firms definition of Finished Goods Inventory or Merchandise Inventory has it as a liability not an asset due to - Storage Charges, Insurance on it, Safeguarding it, concept of Just In Time ________Are these really IFRS Standards??________
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Bibliography
AICPA, International Financial Reporting Standards (IFRS), an AICPA Backgrounder AICPA Website, www.aicpa.org AICPA IFRS website, www.ifrs.com University Professors Weigh in on Building IFRS in Curricula, KPMG-AAA Survey. In www.Marketwatch.com. Colleen Cunningham, CPA talk on IFRS, IMA National Conference, June 2010
Bibliography (Continued)
International Federation of Accountants website, www.iafc.org SEC website, www.sec.gov Price Waterhouse Coopers Website, www.pwc.tv Bruce Pounder, CMA, CFM articles in Strategic Finance, contact and website, BPounder@leveragedlogic.com
Questions????
Thank you!!