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  1. 1. Environment of International Research Chapter 5
  2. 2. Learning Objectives <ul><li>The international accounting environment </li></ul><ul><li>Global and domestic adoption of IFRS </li></ul><ul><li>IASB and its structure </li></ul><ul><li>The standard-setting process, including due process </li></ul><ul><li>Utilizing e-IFRS </li></ul>
  3. 3. International Environment <ul><li>See Figures 5-1 and 5-2 for global and US IFRS convergence efforts. </li></ul><ul><li>US milestones: </li></ul><ul><ul><li>Norwalk Agreement </li></ul></ul><ul><ul><li>Memorandum of Understanding </li></ul></ul><ul><ul><li>SEC roadmap </li></ul></ul>
  4. 4. IASB <ul><li>Role is to issue high-quality, enforceable, global financial reporting standards </li></ul><ul><li>Several entities/procedures involved in standard setting: </li></ul><ul><ul><li>International Accounting Standards Committee Foundation Constitution (The Constitution) </li></ul></ul><ul><ul><li>The Monitoring Board </li></ul></ul><ul><ul><li>International Accounting Standards Committee (IASC) Foundation </li></ul></ul><ul><ul><li>Standards Advisory Council (SAC) </li></ul></ul><ul><ul><li>The Board itself </li></ul></ul><ul><ul><li>International Financial Reporting Interpretations Committee (IFRIC) </li></ul></ul>
  5. 5. IASB Authorities <ul><ul><li>An introduction </li></ul></ul><ul><ul><li>Table of contents </li></ul></ul><ul><ul><li>Objective </li></ul></ul><ul><ul><li>Scope </li></ul></ul><ul><ul><li>Definitions </li></ul></ul><ul><ul><li>Actual standard </li></ul></ul><ul><ul><li>List of voting IASB members </li></ul></ul><ul><ul><li>Basis for qualifying or dissenting votes </li></ul></ul><ul><ul><li>Appendices </li></ul></ul><ul><li>Most IFRS contain the following: </li></ul>
  6. 6. IASB Due Process <ul><li>Six stages </li></ul><ul><ul><li>Input from working groups </li></ul></ul><ul><ul><li>Plan the research project </li></ul></ul><ul><ul><li>Develop and publish a discussion paper </li></ul></ul><ul><ul><li>Develop and publish an exposure draft </li></ul></ul><ul><ul><li>Draft an IFRS or publish a second exposure draft </li></ul></ul><ul><ul><li>Hold meetings with constituents with respect to implementation guidance </li></ul></ul>
  7. 7. IFRIC Due Process <ul><li>IFRICs clarify IFRS or prevent diverging viewpoints </li></ul><ul><li>Seven stage due process </li></ul><ul><ul><li>Study to identify the issue </li></ul></ul><ul><ul><li>Agenda is set </li></ul></ul><ul><ul><li>IFRIC meetings and voting occurs </li></ul></ul><ul><ul><li>Draft interpretation is developed </li></ul></ul><ul><ul><li>IASB is consulted </li></ul></ul><ul><ul><li>Comment period allowed </li></ul></ul><ul><ul><li>Interpretation is approved by IFRIC and IASB </li></ul></ul>
  8. 8. Conceptual Framework <ul><li>Establishes objectives and concepts for development of accounting standards </li></ul><ul><li>Board uses framework for developing future standards </li></ul><ul><li>Prepares and researchers use the framework in the absence of published standards </li></ul><ul><li>Framework (objectives, assumptions, qualitative characteristics, elements, capital maintenance) </li></ul>
  9. 9. IFRS Funding and Regulation <ul><li>Funding to the IASC Foundation is voluntary </li></ul><ul><li>Local regulations govern the preparation and issuance of financial statements </li></ul>
  10. 10. IFRS Funding and Regulation (contd.) <ul><li>IASB does not have authority to require compliance, however there are committees that examine compliance with IFRS. </li></ul><ul><ul><li>The EU ensure consistency through Committee of European Securities Regulators (CESR) and European Securities Committee (ESC) </li></ul></ul><ul><ul><li>The SEC also examines cross-border regulatory compliance </li></ul></ul>
  11. 11. IFRS Research <ul><li>Hierarchy </li></ul><ul><ul><li>All pronouncements have same authority, but there is a hierarchy presented in IAS No. 8 that is useful to the researcher: </li></ul></ul><ul><ul><ul><li>Apply specific IFRSs and if they do not apply, then </li></ul></ul></ul><ul><ul><ul><li>Apply other IFRSs that involve similar or related issues </li></ul></ul></ul><ul><ul><ul><li>Apply the IFRS framework </li></ul></ul></ul><ul><ul><ul><li>Apply pronouncements of other standard setting bodies. </li></ul></ul></ul>
  12. 12. e-IFRS <ul><ul><li>The IASC Foundation Constitution </li></ul></ul><ul><ul><li>The Framework </li></ul></ul><ul><ul><li>preface to IFRS </li></ul></ul><ul><ul><li>IFRSs </li></ul></ul><ul><ul><li>IAS </li></ul></ul><ul><ul><li>IFRICS </li></ul></ul><ul><ul><li>SIC </li></ul></ul><ul><ul><li>Glossary </li></ul></ul><ul><ul><li>Due process handbook for IASB and IFRIC </li></ul></ul><ul><li>Available in several languages </li></ul><ul><li>The electronic version is a replica of the bound manual released by the IASB. </li></ul>
  13. 13. Searching in e-IFRS <ul><li>Glossary </li></ul><ul><ul><li>Terms referenced to each standard and paragraph number </li></ul></ul><ul><li>Directly go to standard of interest by perusing list </li></ul><ul><li>Advanced search function can be refined by: </li></ul><ul><ul><li>Volume, standard, issue date, word stems, exact phrases, and connectors. </li></ul></ul>
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