Accounting Day 2011. Steve Austin speaks about the very latest developments at the SEC, FASB, and IASB on the US convergence to IFRS, the latest status of “adoption” of these new standards in the top 10 industrialized countries in the world and to better understand the SEC’s recently released “IFRS Work Plan.”

1. Latest Developments in IFRS –
Is the US Finally Ready to
Move Forward?
Accounting Day
9:15am – 10:35am (Track A)
May 9, 2011
Stephen G. Austin, CPA, MBA
Firm Managing Partner
Swenson Advisors, LLP
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2. Stephen G. Austin, CPA, MBA
 Over 35 years of public accounting experience as an Audit
Partner with Price Waterhouse, McGladrey & Pullen, LLP, and
Swenson Advisors, LLP
 Certified Public Accountant - California and Georgia
 Audit Committee Chairman - Avanir Pharmaceuticals, Rock
Church, World Trade Center San Diego, and Santa Fe Christian
Schools
 Serves on twenty Boards and related Committees
 Author of “Rise of the New Ethics Class”
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3. Swenson Advisors, LLP
A Regional Accounting Firm with Global Outreach
■ PCAOB Registered Firm
■ Offices in San Diego, Riverside County,
and Hong Kong
■ SEC/SOX - Audit, Tax, Compliance, Asia Pacific Compliance
services, IFRS Consulting
■ SOX Consulting Services with SWENTRACKTM - Automated
Web Based Solutions
■ Top #30 Accounting Firms in San Diego from 2009 – 2011
■ Second Largest Accounting Firm in Riverside County
■ Members of Integra International - 174 offices, 59 countries
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4. BREAKING NEWS
David Tweedie
IASB chairman said:
He wants to “stick to the June timeline to focus minds but
there would not be compromise on quality.”
IFRS and FASB Extend Convergence Timetable
and Issue April, 2011 Progress Report
“Global accounting rule setters urged to take time,” 4/1/11, H.Jones 4

5. BREAKING NEWS
“IASB and FASB Report Progress on Convergence”
(Journal of Accountancy, 4/21/11)
■ On April 14, 2011, FASB and IASB
have jointly announced a further
delay to the convergence of IFRS
■ Announced that they would defer
“by a few months” the timeline for:
■ Revenue recognition – End of 2011
■ Leasing – End of 2011
■ Financial instruments – End of 2011
■ Insurance – First half of 2012
■ Boards expect to issue new standards on fair value
measurements and presentations of other comprehensive
income in the new few weeks.
■ April 21, 2011 – Progress Report 5

6. BREAKING NEWS
Michel Barnier
Member of IASB’s monitoring board:
"Convergence should not be at the expense of quality."
"It is essential that the IASB responds fully to concerns
expressed by stakeholders, including additional
field-testing of projects where needed.”
“We should make use of the deadline set by the G20
(Group of 20 leading economies) recently.”
“Global accounting rule setters urged to take time,” 4/1/11, H.Jones 6

7. BREAKING NEWS
Robert Glauber
IASB Trustee:
“Convergence was moving forward and it still
has some distance to go.”
"We continue to tell the monitoring board they should be
totally assured we do not and shall not permit due
process to be sacrificed to any kind of deadline."
“Global accounting rule setters urged to take time,” 4/1/11, H.Jones 7

8. BREAKING NEWS
Mary Schapiro
Chairman of US SEC:
“I think the rigour and timeliness of
oversight is especially important.”
“Global accounting rule setters urged to take time,” 4/1/11, H.Jones 8

9. 9

10. IFRS Timeline
2001 Formation of the IASC Foundation and the IASB
2002 EU passes regulation to adopt IFRS for listed entities in 2005
FASB and IASB sign ‘The Norwalk Agreement’ in which they
commit to reduce differences between US GAAP and IFRS,
initiating the conversion efforts
2005 Nearly 7,000 listed entities in Europe adopt IFRS
2006 IASB announces ‘three years stable platform period’ - entities
that have already adopted IFRS do not need to implement new
IFRS until 2009
2007 SEC removes reconciliation requirement for non-US entities
reporting under IFRS
2008 SEC proposes roadmap for potential mandatory adoption of
IFRS by US Filers
2009 New SEC Chairman Mary Shapiro is reluctant to fully support
roadmap to IFRS. In April, the Group of Twenty supports IFRS
as one important step towards reforming the Financial System
2010 SEC Work Plan
2011 SEC – April Progress Report/July Roundtable
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11. Why Global Accounting Standards?
■ Global Accounting Standards improve the functioning of
global capital markets by providing better information to
investors and other users of financial statements
 Decrease the costs of preparing and interpreting financial
statements
 Decrease cost of capital
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12. IFRS for
Small and Medium Enterprises
(SMEs/Private Entities)
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13. BREAKING NEWS
SME accounting standards response ‘bigger than
expected’ (Accountancy Age, 5/3/11)
■ Stakeholders were first invited to comment on the Accounting
Standards Board’s (UK ASB) consultation document in October 2010
■ “The Consultation” on IFRS for SMEs concluded on Saturday, April
30th with a response that exceeded expectations
■ Respondents’ main concerns have focused on efforts to simplify
FRSME (the draft IFRS for SMEs) by removing some of the options
available under full IFRS
■ The ASB board has begun working through the responses which will
take until Fall with a Report to emerge in late 2011
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14. Summary – IFRS for SMEs
 Issued July 2009
 Culmination of a five year project
 Represents a stand alone set of
standards
 Considerably shorter –
only 230 pages
 35 chapters
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15. Definition of Users
 Small and medium-sized entities are entities that:
(a) Do not have public accountability, and
(b) Publish general purpose financial statements for
external users. Examples of external users include
owners who are not involved in managing the
business, existing and potential creditors, and credit
rating agencies
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16. 30+ Topics
 Financial statement presentation
 Four separate financial statements
 Footnotes
 Accounting policies
 Inventory
 Investment in associates and joint ventures
 PP&E
 Goodwill and intangibles
 Leases
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17. 30+ Topics, Continued
 Reserves and contingencies
 Revenues
 Share-based payments
 Impairments
 Employee benefits
 Taxes
 Foreign currency translation
 Hyper inflation
 Related parties
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18. Key Differences Between
Full IFRS and IFRS for SMEs
 Jointly controlled entities - no proportional consolidation
 Investment properties – no cost method allowed
 PP&E / intangibles – no revaluation treatment
 Employee benefits – no corridor method allowed
 Intangibles – no capitalization of R&D costs
 Borrowing costs – expense only
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19. Overview of
Convergence Process
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20. MoU Process
First MoU – February 2006
Second MoU – 2008
Third MoU – 2009
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21. 21

22. SEC Initial Work Plan (February 2010)
– Six Components
1. Sufficient development and
application of IFRS for the US
domestic reporting system
2. Independent Standard settings
for the benefit of investor
3. Investor understanding and
education regarding IFRS
4. Regulatory environment
5. Impact of issuers
6. Human capital readiness
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23. Subsequent Series of Progress
and Work Plan Reports
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24. Recent Changes at the Top of the
IASB and FASB and their Impact
on the Timing of Convergence
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25. Transitional Times
 Tommaso Padoa-Schioppa – IFRS Foundation Chairman
• Dies of Heart Attack - Process for selecting a new
Chairman will be published soon
 Sir David Tweedie – IASB Chairman
• Hans Hoogervorst will succeed Sir David Tweedie on his
retirement as chairman of the IASB – June 30, 2011
 Robert Herz – FASB Chairman
• Leslie Seidman named FASB Chairman. Her appointment
comes as FASB deals with an unprecedented workload to
complete priority convergence projects with the IASB by
June 30th
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26. 2010-2011
New Pronouncements and Updates
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27.  One new standard – IFRS 9
 One revised standard – IAS 24
 Amendments to IFRS that were issued as
separate documents
 Amendments to IFRS issued in the second
annual improvement projects
 Amendments to other IFRS resulting from those
revised or amended standards
 Two new interpretations – IFRIC 18 and 19
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28. New Pronouncements
 IFRS 9 Financial Instruments
 IAS 24 Related Party Disclosures
 IFRIC 18 Transfers of Assets from Customers
 IFRIC 19 Extinguishing Financial Liabilities with
Equity Instruments
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29. Amendments to IFRS Issued
as Separate Documents
 Amendments to IFRS 7
 Amendments to IFRIC 9 and IAS 39
 Annual improvements
 Amendments to IFRS 2
 Amendments to IFRS 1
 Amendments to IAS 32
 Amendments to IFRIC 14
 Amendments to IAS 12
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30. Status of Convergence Work
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31. Overview of the
New Revenue Recognition Model
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32. Work Plan for Remaining Priority
Convergence Projects
Revenue recognition:
 The IASB and FASB published a joint discussion paper in December
2008
 The project is critical to both the FASB and the IASB. US GAAP has
a wide range of very detailed industry-specific requirements
 The boards have been considering the feedback received from
comment letters and the boards’ extensive outreach activities and
are close to completing their redeliberations
Draft of the new standard will be:
a) Made generally available, via the boards’ websites, for interested parties to
review;
b) Used as the basis for outreach with parties that are most affected by the
proposed new requirements; and
c) Subjected to a detailed drafting review with selected parties, as part of the
fatal flaw review process each board is required to undertake
 The board will consider feedback that they received from these steps
to assess whether they can proceed to finalize the standards
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33. Exposure Draft
Issued in June 2010
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34. Key Components :
Revenue Recognition
Step 1 Identify the contracts with the customer
Step 2 Identify the separate performance obligations
Step 3 Determine the transaction price
Step 4 Allocate the transaction price to the performance
obligations
Step 5 Recognize revenue when a performance
obligation is satisfied
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35. Expanded Footnote Disclosures
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36. 36

37. Work Plan for Remaining Priority
Convergence Projects
Leasing:
 The objective of this project is to improve financial reporting by
ensuring that all assets and liabilities arising from lease contracts are
recognized in the statement of financial position
 The boards published a joint exposure draft in August 2010
 The boards have been considering the feedback received from
comment letters and the boards’ extensive outreach activities
 They intend to develop a draft of the new standard, which will be:
a) Made generally available, via the boards’ websites, for
interested parties to review;
b) Used as the basis for outreach with parties that are most
affected by the proposed new requirements; and
c) Subjected to a detailed drafting review with selected parties,
as part of the fatal flaw review process each board is required
to undertake
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38. Work Plan for Remaining Priority
Convergence Projects
Financial instruments:
 Efforts to improve our requirements and to reach a
common solution have been complicated by differing
imperatives that pushed our respective development
timetables out of alignment
 Strategy for addressing those differences remains the
same – each board has been publishing its proposals
while also soliciting comment on those of the other board,
as a way of giving interested parties the opportunity to
compare and assess the relative merits of both boards’
proposals
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39. Top 10 Industrialized countries
and their Use of IFRS
and
How they Have Implemented
the New Standards
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40. Understanding the
Differences between
“Adoption”
and
“Adaptation”
(=Adaption?)
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41. China
 Rules for Listed Filings
Is IFRS required for all listed companies?
No, however CAS (Chinese Accounting Standards) have “somewhat
converged” with IFRS. It is not a direct translation of IFRS and
several differences remain between CAS and IFRS. The Ministry of
Finance has plans to eliminate those differences.
Version of IFRS is not applicable.
 Rules for Statutory Filings
Is IFRS or IFRS for SMEs required, permitted or prohibited?
IFRS or IFRS for SMEs are prohibited.
Basically “stuck” in the 2006 version of IFRS.
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IFRS adoption by country – www.pwc.com

42. India
 Rules for Listed Filings
Is IFRS required for all listed companies?
No, Financial Statements must be prepared in accordance with
Indian GAAP. Version of IFRS is not applicable.
 Rules for Statutory Filings
Is IFRS or IFRS for SMEs required, permitted or prohibited?
IFRS and IFRS for SMEs are prohibited. Financial Statements
must be prepared in accordance with Indian GAAP.
Failed to meet the March, 2011 deadline.
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IFRS adoption by country – www.pwc.com

43. United Kingdom
 Rules for Listed Filings
Is IFRS required for all listed companies?
Required for consolidated financial statements. Permitted for
standalone/separate financial statements.
IFRS as adopted by EU.
 Rules for Statutory Filings
Is IFRS or IFRS for SMEs required, permitted or prohibited?
Permitted for standalone/separate financial statements.
IFRS for SMEs is prohibited.
Parent companies can choose to apply IFRS or UK GAAP.
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IFRS adoption by country – www.pwc.com

44. Germany
 Rules for Listed Filings
Is IFRS required for all listed companies?
Required for all consolidated financial statements.
IFRS as adopted by EU.
 Rules for Statutory Filings
Is IFRS or IFRS for SMEs required, permitted or prohibited?
Permitted, for standalone financial statements as long as
additionally, local GAAP (HGB) consolidated financial
statements are prepared and filed.
IFRS for SMEs is prohibited.
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IFRS adoption by country – www.pwc.com

45. France
 Rules for Listed Filings
Is IFRS required for all listed companies?
Required for consolidated financial statements.
IFRS as adopted by EU.
Are subsidiaries of foreign companies or foreign companies listed on
local exchanges subject to different rules?
Yes. Non-EU companies can apply Japanese, US or Canadian
GAAP.
 Rules for Statutory Filings
Is IFRS or IFRS for SMEs required, permitted or prohibited?
IFRS and IFRS for SMEs are prohibited.
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IFRS adoption by country – www.pwc.com

46. Australia
 Rules for Listed Filings
Is IFRS required for all listed companies?
Required for consolidated financial statements. There is no
longer a requirement to prepare separate standalone financial
statements for the parent entity.
IFRS as adopted using the Australian version of IFRS.
 Rules for Statutory Filings
Is IFRS or IFRS for SMEs required, permitted or prohibited?
IFRS is required for most consolidated and
standalone/separate financial statements.
IFRS for SMEs is prohibited.
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IFRS adoption by country – www.pwc.com

47. New Zealand
 Rules for Listed Filings
Is IFRS required for all listed companies?
Required for consolidated and standalone/separate financial
statements. Like Australia, IFRS as adopted locally. All
requirements of IFRS as published by IASB are retained, but also
some additional requirements are included in New Zealand
Equivalents to IFRS (NZ IFRS) (mainly in relation to public benefit
entities, so these would not be relevant for listed entities).
 Rules for Statutory Filings
Is IFRS or IFRS for SMEs required, permitted or prohibited?
NZ IFRS is required for some companies and IFRS for SMEs is
prohibited.
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IFRS adoption by country – www.pwc.com

48. Japan
 Rules for Listed Filings
Is IFRS required for all listed companies?
Listed companies which meet certain requirements ("Specified Companies") are
permitted to use IFRS for their consolidated financial statements ending on or
after March 31, 2010.
IFRS as adopted by the Financial Services Agency ("Designated IFRS’").
The Commissioner of the Financial Services Agency of Japan will
designate those IFRSs published by the IASB which are recognized as
having been approved and issued through fair and reasonable due
process and are expected to be considered as being fair and appropriate
financial reporting standards from the viewpoint of investor protection
and market integrity in Japan.
 Rules for Statutory Filings
Is IFRS or IFRS for SMEs required, permitted or prohibited?
Companies which file their consolidated financial statements under the
Companies Act are permitted to use IFRS for the consolidated financial
statements ending on or after March 31, 2010, if they are Specified
Companies.
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IFRS adoption by country – www.pwc.com

49. Spain
 Rules for Listed Filings
Is IFRS required for all listed companies?
IFRS is required for consolidated financial statements for listed
companies (other than financial institutions). Financial institutions
must apply a local accounting plan that complies with IFRS
although it is not called IFRS. Main differences are the elimination
of the “non preferable accounting policies” when there are
alternatives (i.e. the fair value model for IAS16 items is not
permitted).
IFRS as adopted by the EU.
 Rules for Statutory Filings
Is IFRS or IFRS for SMEs required, permitted or prohibited?
IFRS is permitted for consolidated financial statements.
All other companies must use New Spanish GAAP (effective
January 1, 2008), which is essentially IFRS based with some
differences.
IFRS for SMEs is prohibited.
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IFRS adoption by country – www.pwc.com

50. South Korea
 Rules for Listed Filings
Is IFRS required for all listed companies?
Adoption of IFRS is required for all listed companies and certain
unlisted financial institutions from 2011.
IFRS as published by IASB and translated to Korean language
word-for-word.
 Rules for Statutory Filings
Is IFRS or IFRS for SMEs required, permitted or prohibited?
IFRS is permitted from 2009 for all statutory filers. In 2011, IFRS is a
requirement for all listed statutory filers and certain unlisted
financial institutions.
IFRS for SME is prohibited for statutory filings.
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IFRS adoption by country – www.pwc.com

51. “Deep Dive” into the
Progress Report (October 29, 2010)
on the SEC Work Plan
and
Practical Issues Surrounding
IFRS Adoption
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52. Progress Report on SEC Work Plan
October 29, 2010
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53. SEC “Preliminary Observations”
(October 2011)
Approaches to Incorporate IFRS into a Jurisdiction’s
Financial Reporting System
1. Use IFRS as issued by IASB
Very few follow!
2. Use IFRS after some form of national incorporation process
Leading to...
Convergence approach
and/or
Endorsement approach
53

54. Convergence Approach
China – Best Example
 Moving closer
 Not full incorporated
 Follow “ASBEs” – Accounting Standards for Business
Enterprises (Set by the Accounting Law of the PRC)
 Adopted 2006 standards in 2007
 September 2009 – new Roadmap (exposure draft)
 In state of “lull”
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55. Endorsement Approach
(Vast Majority Follow this Approach)
 Degree of deviation varies by jurisdiction
 Translated into local language (not English)
 Modification based on “country specific issues”
 EU – largest example
Australia – 2nd largest example
2005 Must follow IAS adopted by European Commission for listed companies
2006 ‐ New IFRS must go through multiple steps before its authorized by the
Present “EFRAG” (European Financial Reporting Advisory Group)
and then “SARG” (Standards Advice Review Group) and then..
“ARC” (Accounting Regulatory Commission) and finally...
the European Parliament has three months to oppose endorsement
If not opposed published in the Office Journal of the EU 55

56. Other Critical
SEC Observations and Concerns
 Oversight of the IFRS Foundation?
 Composition of the IFRS Foundation and IASB
 Significant underfunding of the IFRS Foundation
• Operating deficits of $4 million
• 75% of the countries do not help fund
• United States accounts for about 25% of total
funding
 Many issues to resolve!!!
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57. Understanding the New Term
“Condorsement”
(Convergence + Endorsement)
and
What It Means to You!
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58. What to Expect from the SEC
in the Next 30-60 Days
58

59. SEC will sponsor a Roundtable in July to
discuss benefits/challenges in potentially incorporating IFRS
into the financial reporting system for US issuers
The July 7 event will feature three panels representing –
investors, smaller public companies, and regulators
SEC welcomes feedback on the topics to address at the roundtable
and suggestions for potential roundtable participants
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60. SEC sent a letter to the Center for Audit Quality –
acknowledging that it would be impossible for foreign private issuers,
or those who file their financial statements
with the SEC following IFRS, to file in XBRL following SEC rules
On March 25, IFRS Foundation finalized the 2011 IFRS Taxonomy,
however the SEC has not yet approved that taxonomy
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61. IFRS Foundation to Add Common-Practice
Tags to IFRS Taxonomy
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62. What You and Your Team
Should Be Doing Now
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63. PWC Survey
April 2011
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64. 64
2011 US GAAP Convergence & IFRS Survey, 4/11/11

65. Some 43% respondents said the pace is too fast.
15% thought the pace was too slow.
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2011 US GAAP Convergence & IFRS Survey, 4/11/11

66. Predictive Timeline for
2011-2015?
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73. Personal Experience in 2011
Teaching IFRS to the Chinese
at the MBA Level
at Shanghai University
of Finance and Economics
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74. Thank You
Stephen G. Austin, MBA, CPA
steve.austin@swensonadvisors.com
www.SwensonAdvisors.com
www.swentrack.com
www.swensonforensic.com
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