IFRS vs. U.S. GAAP a Watkins Meegan Lunch & Learn
-
Upload
andrea-contres -
Category
Economy & Finance
-
view
1.718 -
download
3
description
Transcript of IFRS vs. U.S. GAAP a Watkins Meegan Lunch & Learn
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
Agenda
• World wide endorsement of IFRS• IFRS vs US GAAP• IFRS for Small & Medium-sized
Entities (SMEs)• Resources
Proprietary & Confidential 2
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
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
Proprietary and Confidential 5
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
Convergence
• FASB and IASB joint projects defined in the 2006 Memorandum of Understanding are expected to be completed in 2011o Revenueo Leases o Financial Instrumentso Statement of Comprehensive Incomeo Fair Value Measuremento Balance Sheet Nettingo Financial Statement Presentation
Proprietary and Confidential 7
IFRS vs US GAPP
Proprietary and Confidential 8
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
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
IFRS for SMEs
• What companies?o Definition is based on the ‘nature’ of the entity
not the sizeo Any entity that does NOT have public
accountabilityo Includes subsidiaries of public companies
oUS subsidiaries of foreign parentso It may be used in the US today.
Proprietary and Confidential 11
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
Resources
• IASB.orgo Supported by IFRS Foundation and IASBo Full IFRS in multiple languageso IFRS for SMEso Training modules and implementation guides
• IFRS.como Supported by AICPA
• Wiki.ifrs.como US GAAP – IFRS for SMEs comparison
• AICPA recently announced an IFRS certification that is earned on-line through 42 hours of CPE modules
Proprietary and Confidential 13