1. International Financial Reporting Standards versus U.S. GAAP Gary Bulmash, CPA, D.B.A., Accounting, University of Maryland Sandy Wendler, CPA, Manager, Watkins Meegan LLC April 6, 2011 Proprietary and Confidential

2. Agenda World wide endorsement of IFRS IFRS vs US GAAP IFRS for Small & Medium-sized Entities (SMEs) Resources Proprietary & Confidential 2

3. International Accounting Rules Collectively referred to as IFRS: International Financial Reporting Standards (IFRS) Numbered series of pronouncements issued by the International Accounting Standards Board (IASB) International Accounting Standards (IAS) Issued by the International Accounting Standards Committee (IASC) which is the predecessor to the IASB Issued almost 50 standards and over 40 interpretations Three-tier structure based on the FASB governance model Monitoring Board (SEC) IFRS Foundation Trustees (Appointments and Financing) IASB (Full-time professionals) Includes US Representation at all levels Proprietary and Confidential 3

4. Vision of the IASB “My vision, not surprisingly, includes IFRS as the common basis of financial reporting for listed companies throughout the world, including the United States. These standards, applied consistently, will provide high quality, transparent and comparable information for investors and other users of financial information. The standards must be based upon clearly articulated principles and not unnecessarily laden with detailed rules and guidance.” Sir David Tweedie, Chairman, IASB, March 10, 2011 Proprietary and Confidential 4

5. Proprietary and Confidential 5

6. Endorsement of IFRS Over 100 countries either require or permit the use of IFRS for publicly traded companies European Union – requires the use of IFRS for all public companies US – SEC allows foreign private issuers in the US to use IFRS AICPA – IFRS are GAAP SEC decision due in 2011 – Endorsement or Condorsement? Proprietary and Confidential 6

8. Leases

9. Financial Instruments

10. Statement of Comprehensive Income

11. Fair Value Measurement

12. Balance Sheet Netting

13. Financial Statement PresentationProprietary and Confidential 7

14. IFRS vs US GAPP Proprietary and Confidential 8

15. Financial Statements Comparative Statements are required Primary financial statements often include a separate column titled “notes” Companies may choose the presentation format for the balance sheet A=L + OE or A – L = OE Decreasing or increasing order of liquidity Statement of Comprehensive Income One or two statements No extraordinary items Expenses may be based on function (e.g. CGS) or nature (e.g. advertising, salaries) Proprietary and Confidential 9

16. IFRS for SMEs “Good Financial Reporting Made Simple.” IFRS simplified for Private companies Self-contained, comprehensive set of standards released in July 2009 230 pages – 34 topics – updated periodically Simplified measurement and disclosures Omits complex issues Proprietary and Confidential 10

18. Any entity that does NOT have public accountability

19. Includes subsidiaries of public companies

20. US subsidiaries of foreign parents

21. It may be used in the US today.Proprietary and Confidential 11

22. IFRS for SMEs Differences with full IFRS Goodwill and indefinite-lived intangibles are amortized over useful life or 10 years ALL R & D are expensed Differences with US GAAP LIFO is not allowed, impairments of inventory may be reversed All borrowing costs are expensed Proprietary and Confidential 12

24. Full IFRS in multiple languages

25. IFRS for SMEs