STARRING

IFRS

2012 ACCOUNTING GAMES

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“International Financial Reporting Standards

(IFRS) are a set of accounting standards developed by in the International Accounting

Standards Board becoming the global standard for the preparation for public company financial statements”

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Going for Gold

Story of IFRSBattle for the Gold AIS

ImplicationsWinning Strategy

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Goal of IFRS• High quality, understandable, enforceable, and

global accepted financial reporting standards• Principle based

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Why Should We Switch Teams?

Higher quality investmentsComparability Raise disclosure standardConsistency

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Team Player Award

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StakeholdersInvestors Regulators

Auditors

Academics

National StandardSetters

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A. Interesting Friends Read StoriesB. International Financial Reporting StandardsC. Imperial Framework Regarding StandardsC. Important Financial Reporting School

What does IFRS stand for?

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B. International Financial Reporting Standards

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How are the IFRS standards based?A. Rule BasedB. Fun BasedC. Principle basedD. Consistency based

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How are the IFRS standards based?

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C. Principle based

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Battle for the Gold

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Pros

ComparabilityReduced Information asymmetryAudit EfficiencyRelevanceExcellent Labor Mobility

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Cons

RelearnCultural InfluenceCostlyDiminish U.S. power over accounting Extraordinary loss/gain not allowed

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Differences Between GAAP and IFRSInventoryConsolidationDevelopment CostEarnings-per-ShareStatement of Income

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A.ComparabilityB.RelevanceC.Admittance into VIP sections world-wideD.Audit efficiency

Which of the following is NOT an advantage of IFRS?

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C. Admittance into VIP sections world-wide

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True/False

True/False: “IFRS allows using LIFO method for inventory measurement”

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True/False

FALSEI

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AIS Implications

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Areas of Impact within AISNew Data RequirementsChanges to the Chart of AccountsReconfiguration/Modification of Existing

SystemsSelection and Implementation of New

SystemsInterface and Mapping ChangesReporting Packs

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Information System Impacts

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• More detailed presentation of information• Information calculated on a different basisNew Data Requirements

• Change due to re-classifications and additional reporting criteria

• Creation of new accounts and deletion of accounts that are no longer required

Changes to the Chart of Accounts

• Changes to existing software to enable accounting under IFRS• Larger ERP systems and high-end general ledger packages.

• New reports and calculations to accommodate IFRS• Spreadsheets and Models for:• New or Changed calculations• New or changed Reports• New Models

Reconfiguration/Modification of Existing Systems

Information System Impacts

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• Implementation of new software to accommodate IFRS

• New Software developmental project or solution

Selection and Implementation of New Systems

• Timing and frequency of data transfer requirements

• Changes to existing mapping tables to accommodate IFRS interfaces

• Financial statements based on receipt of consolidated information from general ledger

Interface and Mapping Changes

• Additional disclosures information from branches/subsidiaries operating on a standard general ledger package

• Reporting tools used by subsidiaries and branches may need to modified

Reporting Packs

Example of AIS Convergence to IFRS

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Purchase of a new Company Building

GAAPCapitalize Cost of Building and Depreciate it over the

useful life.

IFRSAllocate Total Costs to

applicable Components (building, roof, fixtures,

etc.) and depreciate over the useful life

A. New Data RequirementsB. Selection and Implementation of new systemsC. Accounts Payable ModuleD. Reconfiguration/Modifcation of existing

systems.

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What is not one a major issue areas for implementation in AIS?

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C. Accounts Payable

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A winning strategy

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Two Approaches to IFRS Implementation

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USA Implementation MilestonesImproving Specific Accounting StandardsImproving the Structure and Funding of the IASBFacilitating the use of interactive data (XBRL) under IFRSUpdating the Education and Licensing of U.S. AccountantsEvaluating the early adoption experiences of a limited group

of companiesTiming of future rulemakingSequencing of companies required to use IFRS USA plans to completely converge in 5-7 years

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In many years does the United States hope to be fully converged to IFRS?

A.) 1-3 yearsB.) 7-10 yearsC.) NeverD.) 5-7 Years

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D.) 5-7 Years

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What are your concerns regarding implementation and change to IFRS from GAAP?

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ConclusionPrinciple basedUniform, global accounting standardsHigher quality of investmentsApproximately 120 nations have adoptedBenefits outweigh costsWho are the gold medalists of the 2012

Accounting Olympics?

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Sourceshttp://www.ifrs.com/ifrs_faqs.html#q3http

://www.foxbusiness.com/personal-finance/2011/11/28/what-switch-from-gaap-to-ifrs-may-mean-for-investors/#ixzz1v59BUY7P

http://www.ifrs.org/Use+around+the+world/Use+around+the+world.htmhttp://www.ifrs.com/overview/General/differences.htmlwww.pwc.comhttp://ifrsusa.wordpress.com/ifrs-roadmap-milestones/

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