The Future of International Financial Reporting

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The Future of International Financial Reporting

• Sir David TweedieIASB Chairman

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Need for Convergence

• Attracting investment through transparency
• Reducing the cost of capital
• Increasing world-wide investment
• Reducing costs

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IASC Developments

• Improvements Project

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IASC Developments

• Improvements Project
• IOSCO Agreement

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IASC Developments

• Improvements Project
• IOSCO Agreement
• The Restructuring

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IASB Structure
19 Trustees
Standards Advisory Council
IASB
IFRIC
National Standard Setters
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IASC Developments

• Improvements Project
• IOSCO Agreement
• The Restructuring
• EU 2005

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IFRS Around the World

• Countries Change Total
• in 2005 in 2006 in 2006
• IFRSs permitted 23 0 23
• IFRSs required 65 1 66
• (for all domestic companies)
• IFRS required 6 0 6
• (for some domestic companies)
• 94 1 95

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Role of National Standard Setter

• Deal with national issues
• Align agenda
• Influence IASB debate
• Lead on certain issues

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The Agenda

• Improvements
• IFRS I

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Grandfather Standards

• Insurance
• Extractive Industries

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Share Based Payments

• Company not party to transaction
• Employees do not provide services
• No cost to company
• EPS hit twice
• Adverse economic consequences

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FASB/IASB Agreement

• Remove differences
• Align Agendas
• Interpretation

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Convergence

• Short-term Differences
• IASB
• - Business combinations (goodwill/brands,
  acquisitions, IPRD)
• - Asset Disposals and Discontinued Operations
  (IFRS 5)
• - Provisions (soon)

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Convergence

• FASB -
• - EPS
• - Voluntary changes in accounting policy
• - Exchanges of non-monetary assets
• - Inventory spoilage and idle capacity
• - Share options

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Conceptual Framework Issues

• The objectives of financial reporting
• Qualitative characteristics
• Definitions of assets and liabilities
• Recognition
• Measurement
• Presentation

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• DR CR

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• Dr

• Asset
• or
• Expense

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• Dr

• Asset
• or
• Expense
• or
• Whatsit

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Reconciliation Plan Short Term

• IASB - Borrowing costs
• - Government grants
• - Joint ventures
• - Segments
• Joint - Impairment
• - Income Taxes

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Reconciliation Plan Short Term

• FASB - Fair value option
• - Investment properties
• - RD
• - Subsequent events
• Joint - Impairment
• - Income taxes

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Reconciliation Major Projects

• Business combinations
• Consolidations/SPV
• Financial Instruments
• Derecognition
• Fair value measurement
• Revenue Recognition

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Reconciliation Major Projects (cont)

• Liability and Equity
• Leases
• Intangibles
• Performance Reporting
• Pensions

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Performance Reporting

• Statements
• Comprehensive income/Cash flows
• Recycling
• Remeasurement
• MDA

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Pensions

• m
• Deficit 10
• Less 10 of liabilities 4
• 6
• Spread over 10 year working life
• Deficit per accounts - 600,000

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Problems for IASB

• Principles v rules

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Problems for IASB

• Principles v rules
• Acceptance of Standards
• EU
• SEC

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Problems for IASB

• Principles v rules
• Acceptance of Standards
• EU
• SEC
• Enforcement

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Other Projects

• Insurance
• Financial Risk Disclosure (IASB)
• SMEs (IASB)

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