Adoption of IFRS in U.S. - An Introduction

1,018 views
923 views

Published on

This webinar was presented at Proformative on March 2012 by Sunil Thukral, CPA, CFA. This presentation provides the overview of the framework of IFRS in U.S.

Published in: Business, Technology
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,018
On SlideShare
0
From Embeds
0
Number of Embeds
133
Actions
Shares
0
Downloads
38
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Adoption of IFRS in U.S. - An Introduction

  1. 1. THE RESOURCE FOR CORPORATE FINANCE, ACCOUNTING & TREASURY PROFESSIONALSAdoption of IFRS in U.S.- An Introduction Sunil Thukral, CPA, CFA Technical Accounting Advisory Sunil.CPA.CFA@gmail.com
  2. 2. IFRS in U.S.• Where are we today?• Rules vs. Principles - exercise• What can I do today? © 2012 Proformative. Proprietary and confidential
  3. 3. SEC Roadmap on IFRS © 2012 Proformative. Proprietary and confidential
  4. 4. Comments on SEC Roadmap for IFRSconvergence:• Cost – By far the two most common criticisms of the roadmap were the cost of adoption and the belief that a more measured convergence process was the best option.• Convergence over Adoption – Continued convergence was a better option than adoption, mostly because fuller convergence between both sets of standards would be less complex and less costly than IFRS adoption.• Consistency Not Guaranteed – Geographic bias © 2012 Proformative. Proprietary and confidential
  5. 5. Comments on SEC Roadmap for IFRSconvergence (Contd.):• Specific Concerns by Specific Industries – IFRS does not have any industry specific guidance.• IASB Funding – Is IASB really independent?• What about Private Companies? – Since the SEC regulates only public companies, comments also pointed to concern that the SEC was not recognizing that most companies in the U.S. are not SEC registrants (issuers). Source: http://www.ifrs.com/updates/aicpa/IFRS_SEC.html © 2012 Proformative. Proprietary and confidential
  6. 6. IFRS is impacting U.S. companies today!U.S. companies need to understand the impact of IFRS:• Convergence of accounting standards (leasing, revenue recognition, and financial instruments)• IFRS is impacting business decisions – Foreign subsidiaries of U.S. companies might be required to report under IFRS for their local filings – U.S. companies making foreign acquisitions (targets reporting under IFRS) – U.S. subsidiaries of foreign parent are required to report under IFRS. © 2012 Proformative. Proprietary and confidential
  7. 7. Comparability of IFRS financials:• IFRS as issued by IASB• IFRS with Carve-outs (e.g. EU version of IFRS)• IFRS are principles based rules. Hence, the application of these rules can be quite different as to “who” applies them. (e.g. geographic bias). 7 © 2012 Proformative. Proprietary and confidential
  8. 8. Which traffic light crossing will you prefer? 8 © 2012 Proformative. Proprietary and confidential
  9. 9. © 2012 Proformative. Proprietary and confidential
  10. 10. Rules Vs Principles exercise:Sort the following shapes into two groups: © 2012 Proformative. Proprietary and confidential
  11. 11. Sorted by shape•A •B 11 © 2012 Proformative. Proprietary and confidential
  12. 12. Sorted by color:•A •B 12 © 2012 Proformative. Proprietary and confidential
  13. 13. • By Color • By Shape What if we add a green colored circle – where will it go? © 2012 Proformative. Proprietary and confidential
  14. 14. Most people choose sorting by shape .Why?•A •B 14 © 2012 Proformative. Proprietary and confidential
  15. 15. Additional Information – assume that: Mixing BLUE (80%) with YELLOW (20%) makes GREEN 15 © 2012 Proformative. Proprietary and confidential
  16. 16. Based on fact green has more blue than yellow:•A •B 16 © 2012 Proformative. Proprietary and confidential
  17. 17. IFRS in Canada - 17 Sunil.Thukral@theIFRS.com© 2012 Proformative. Proprietary and confidential
  18. 18. Same facts can provide you with differentconclusions! “But under a different accounting convention…..” Source: cartoonstock.com18 © 2012 Proformative. Proprietary and confidential
  19. 19. So, what does it all mean? Applying different interpretation to the same facts might result in a different answer. Reality check: Life for the accountants will not become easy when applying simple rules (principles) to complex transactions 19 © 2012 Proformative. Proprietary and confidential
  20. 20. Revenue Recognition Exposure Draft Over 100 glossary terms deleted and replaced with only approx. 9 items in the new revenue recognition exposure draft. Slides Source: www.SVACPA.com © 2012 Proformative. Proprietary and confidential
  21. 21. STEPS IN IMPLEMENTING IFRS – A HIGH LEVEL APPROACH© 2012 Proformative. Proprietary and confidential
  22. 22. IFRS will impact all the areas of yourbusinesses: Graphic Source: kpmg.com © 2012 Proformative. Proprietary and confidential
  23. 23. STEP 1 – REVIEW YOURBUSINESS© 2012 Proformative. Proprietary and confidential
  24. 24. STEP 2 – IDENTIFY THE IFRSTHAT WILL HAVE MATERIALIMPACT© 2012 Proformative. Proprietary and confidential
  25. 25. Identifying which IFRS impacting yourorganization• Determine the IFRS are converged / not-converged, etc. (e.g. – leasing, revenue, business combination, etc.)• Apply the summarized IFRS summarized checklist to identify which IFRS will impact your entities.• Document your findings – maintain back-ups / draft preliminary white papers. © 2012 Proformative. Proprietary and confidential
  26. 26. STEP 3 – DETAILED ANALYSIS© 2012 Proformative. Proprietary and confidential
  27. 27. Detailed Analysis:• Determine the STRATEGIC choices• Update accounting policies• System changes (IT)• Review internal control over financial reporting © 2012 Proformative. Proprietary and confidential
  28. 28. IFRS in U.S. – Other challenges• IFRS/ U.S. GAAP currently have a joint project for development of the accounting standards .. RESULT . many more changes to come over in the next few years (e.g.: Revenue recognition, leasing , financial instruments). Bottom line: IFRS is constantly changing – so need to remain up to date with the changes!! 28 © 2012 Proformative. Proprietary and confidential
  29. 29. Tools to track your IFRS implementation:• Regularly monitor the IFRS project: – Excel spreadsheets or other project management software Graphic source: www.SVACPA.com• Conduct benchmarking – www.DisclosureNet.com – Search engines © 2012 Proformative. Proprietary and confidential
  30. 30. THANK YOU! 30© 2012 Proformative. Proprietary and confidential
  31. 31. QUESTIONS QUESTIONSSunil Thukral, CPA, CFASunil.CPA.CFA@gmail.comLinkedIN: http://www.linkedin.com/in/sunilthukralProformative: http://www.proformative.com/questions/expert/sunil-thukralTwitter: @SunilThukral 31 © 2012 Proformative. Proprietary and confidential
  32. 32. THE RESOURCE FOR CORPORATE FINANCE, ACCOUNTING & TREASURY PROFESSIONALSAdoption of IFRS in U.S.- An Introduction Sunil Thukral, CPA, CFA Technical Accounting Advisory Sunil.CPA.CFA@gmail.com

×