1. Chapter 9
IFRS
Will It Become the Reporting
Standard for U.S. GAAP?

2. Objectives
• Become familiar with the History of the Standard Setting Bodies in
the U.S.
• Understand why International Accounting Standards have emerged
as universally accepted
• Understand why the U.S. is considering either converging U.S. GAAP
with IFRS or the conversion from U.S. GAAP to IFRS
• Review the SEC “Work Plan” for determining the practicality of
adopting IFRS
• Examine the current status of the FASB/IFRS convergence efforts

3. GAAP
• 1920s and 1930s
• The 1934 Act the Securities and Exchange Commission
• The FASB

4. International Financial Reporting
Standards
• The IASB
– IFRS
– IFRS for SMEs
• European Union
• Norwalk Agreement

5. Pressures on GAAP
• Sarbanes Oxley and other regulations
• Additional global capital markets
• NYSE

6. IFRS-GAAP Reconciliation
• Reconciliation required on Form 20-F prior to 11/15/2007
• No longer requires U.S. listed foreign companies to
reconcile
• U.S. companies not allowed to use IFRS
• Unfair advantage
– over 75% of companies completing the form 20-F reconciliation
reported more income under IFRS than under GAAP.

7. SEC Roadmap
• November 2008, the SEC proposed “Roadmap”
• SEC Conditions
• Implementation

8. SEC Conditions
• Improvements in accounting standards
• Accountability and funding of the IASC Foundation
• Improvement in the ability to use interactive data for
IFRS reporting
• Education and training of U.S. preparers and users

9. SEC “Work Plan”
• Is IFRS sufficiently developed and consistent in application for
use as the single set of accounting standards in the U.S.?
• Would the standard setting body for IFRS be independent in
the process and not influenced by outside pressures?
• How will investor understanding and education of IFRS be
accomplished?

10. SEC “Work Plan”
• How will U.S. laws and regulations such as tax laws and
regulatory reporting be impacted by any changes?
• What will be the impact on the companies, both large and
small, regarding changes in the accounting systems, changes
to contractual arrangements, corporate governance
considerations and litigation issues?
• While those that prepare and audit the financial statements
be able to adequately do this?

11. Sufficient Development
• The comprehensiveness of IFRS
• The auditability and enforceability of IFRS
• The comparability of IFRS across jurisdictions

12. Independent Standard Setting
• Oversight of the IFRS Foundation
• Composition of the IFRS Foundation and the
IASB
• Funding of the IFRS Foundation
• IASB Standard Setting Process

13. Investor Understanding and Education
• Conduct Research
• Gather Input

14. Regulatory Environment
• Manner in which SEC fulfills mission
• Industry Regulators
• Federal and State Impacts
• Audit regulation and standard setting
• Broker-dealer and investment company
• Public vs. Private

15. Impact on Issuers
• Accounting systems, controls, and procedures
• Contractual arrangements
• Corporate governance
• Accounting for litigation contingencies
• Smaller issuers vs. larger issuers

16. Human Capital Readiness
• Education and Training
• Auditor Capacity

17. FASB/IFRS Convergence
• Revenue Recognition
• Leases
• Financial Instruments
• Presentation of Other Comprehensive Income
• Fair Value Measurements