® international accounting standards committee foundation december 2005 1 1world bank—advanced...

December 2005 1 1World Bank—Advanced Program in Accounting and Auditing Regulation

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International Accounting Standards Committee Foundation

IFRSs—an overviewIFRSs—an overview

Tricia O’Malley Tricia O’Malley

IASBIASB Board MemberBoard Member

6 December 2005

* The views expressed are those of the speaker, not the IASB

December 2005 World Bank—Advanced Program in Accounting and Auditing Regulation2

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Advisory Groups

Standards Advisory Council

IASC Foundation

StructureStructure

International Accounting

Standards Board

Staff

IFRIC (Interpretations)

The standard setting operation

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IASC FoundationIASC Foundation—Oversight—Oversight

22 trustees: 6 from North America 6 from Europe 6 from Asia/Oceania 4 Any area

Appoint members of IASB, SAC and IFRIC Monitor IASB’s performance, raise funds,

approve budget, responsible for constitution

December 2005 World Bank—Advanced Program in Accounting and Auditing Regulation4

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Standards Advisory Standards Advisory Council (SAC)Council (SAC)

41 members—worldwide Meets 3 times a year Advises IASB on strategy/priorities Informs IASB of implications of major

projects

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®BoardBoard

12 full-time and 2 part-time members Sole responsibility for setting agenda

and standards Presently from 9 countries and 5

continents

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International Financial Reporting International Financial Reporting Interpretations Committee (IFRIC)Interpretations Committee (IFRIC)

Chaired by Board member (non-voting)

12 volunteer voting members Interpretation and clarification of

principles

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®StaffStaff

The Board’s work is supported by: 25 technical staff 25 support and publications staff

- from 12 countries

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®IASB objectiveIASB objective

To develop a single set of high quality, understandable and enforceable global accounting standards that require high quality, transparent and comparable information

To co-operate with national accounting standard setters to achieve convergence

But, why?

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®Outcomes soughtOutcomes sought

Improved economic decision makingBetter pricing of capitalMore efficient allocation of resources

Increased world-wide investment Reduced preparation costs Enhanced regulatory interface

December 2005 World Bank—Advanced Program in Accounting and Auditing Regulation10

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IASB’s a standard-setter IASB’s a standard-setter not a regulatornot a regulator

Standard setters Determines

appropriate financial reporting

Regulators Specify which

regulations should be followed

Responsible for enforcement

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Principle 1:Principle 1:Independent standard settingIndependent standard setting

Independent board members All board meetings in public Thorough due process Private funding No political influence

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Principle 2: Principle 2: Principle based standardsPrinciple based standards

PrinciplesPrinciples RulesRules

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Principle 3:Principle 3:Thorough due processThorough due process

Research

National

Standard

Setter

Discussion

Paper

Exposure

DraftStandard

Others

Comment

analysis

9-15 months 9-15 months

Comment

analysisEffective

Date

6-18 months

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®Tracking the processTracking the process

Websitewww.iasb.org

Meetings:Observer notes Web cast of IASB meetingDecision summaries / Update

Newsletter - Insight (quarterly)

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®IASBIASB priorities priorities

Promoting adoption of IFRSs Convergence Improving standards, filling gaps

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®IASB prioritises by…IASB prioritises by…

Relevance &reliabilityConvergence

Quality

Resourceconstraints

Existing guidance

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®What is convergence?What is convergence?

Old approach was ‘harmonisation’ Convergence differs:

Topic is addressed at the same time using the same due process

Objective is to reach one common high quality answer

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®Convergence processConvergence process

National standard-setters work with the IASBMulti-board teams developing projectsConverge standards to best international

practice

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®Convergence with FASBConvergence with FASB

The work is focused upon: Short to medium term projects with

quick implementation Projects with a medium or long term

view and requiring substantial work SEC accept IFRS reporting without

reconciliation 2007/09

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®SEC roadmapSEC roadmap

2005-2007 Application of IFRS Investors gain

knowledge All share implementation

experiences

2007-2009 Status of IFRS/GAAP

convergence SEC review additional

filings Evaluate significance of

differences Recommend elimination

of reconciliation

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®Active agenda projectsActive agenda projects

Convergence FV Measurement Puttable Instruments Amendments to IFRS 2 Conceptual Framework Revenue Recognition Financial Instruments

Business Combinations II

Performance Reporting (A/B)

Emission Rights Consolidation Insurance SMEs

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Research Research agendaagenda – What the future holds– What the future holds

Measurement objectives

Extractive industries

Financial instruments

Hyperinflation Intangible assets

Management commentary

Investment entities

Liabilities and equity

Leases Joint ventures

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International Accounting Standards Committee Foundation

Questions?Questions?