International Financial Reporting Standards versus U.S. GAAP<br />Gary Bulmash, CPA, D.B.A., Accounting, University of Mar...
Agenda<br />World wide endorsement of IFRS<br />IFRS vs US GAAP<br />IFRS for Small & Medium-sized Entities (SMEs)<br />Re...
International Accounting Rules<br />Collectively referred to as IFRS:<br />International Financial Reporting Standards (IF...
Vision of the IASB<br />“My vision, not surprisingly, includes IFRS as the common basis of financial reporting for listed ...
Proprietary and Confidential          5<br />
Endorsement of IFRS<br />Over 100 countries either require or permit the use of IFRS for publicly traded companies<br />Eu...
Convergence<br />FASB and IASB joint projects defined in the 2006 Memorandum of Understanding are expected to be completed...
Leases
Financial Instruments
Statement of Comprehensive Income
Fair Value Measurement
Balance Sheet Netting
Financial Statement Presentation</li></ul>Proprietary and Confidential          7<br />
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IFRS vs. U.S. GAAP a Watkins Meegan Lunch & Learn

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IFRS vs. U.S. GAAP a Watkins Meegan Lunch & Learn

  1. 1. International Financial Reporting Standards versus U.S. GAAP<br />Gary Bulmash, CPA, D.B.A., Accounting, University of Maryland<br />Sandy Wendler, CPA, Manager, Watkins Meegan LLC<br />April 6, 2011<br />Proprietary and Confidential<br />
  2. 2. Agenda<br />World wide endorsement of IFRS<br />IFRS vs US GAAP<br />IFRS for Small & Medium-sized Entities (SMEs)<br />Resources<br />Proprietary & Confidential 2<br />
  3. 3. International Accounting Rules<br />Collectively referred to as IFRS:<br />International Financial Reporting Standards (IFRS)<br />Numbered series of pronouncements issued by the International Accounting Standards Board (IASB)<br />International Accounting Standards (IAS)<br />Issued by the International Accounting Standards Committee (IASC) which is the predecessor to the IASB<br />Issued almost 50 standards and over 40 interpretations<br />Three-tier structure based on the FASB governance model<br />Monitoring Board (SEC)<br />IFRS Foundation Trustees (Appointments and Financing)<br />IASB (Full-time professionals)<br />Includes US Representation at all levels<br />Proprietary and Confidential 3<br />
  4. 4. Vision of the IASB<br />“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.”<br />Sir David Tweedie, Chairman, IASB, March 10, 2011<br />Proprietary and Confidential 4<br />
  5. 5. Proprietary and Confidential 5<br />
  6. 6. Endorsement of IFRS<br />Over 100 countries either require or permit the use of IFRS for publicly traded companies<br />European Union – requires the use of IFRS for all public companies<br />US – SEC allows foreign private issuers in the US to use IFRS<br />AICPA – IFRS are GAAP<br />SEC decision due in 2011 – Endorsement or Condorsement?<br />Proprietary and Confidential 6<br />
  7. 7. Convergence<br />FASB and IASB joint projects defined in the 2006 Memorandum of Understanding are expected to be completed in 2011<br /><ul><li>Revenue
  8. 8. Leases
  9. 9. Financial Instruments
  10. 10. Statement of Comprehensive Income
  11. 11. Fair Value Measurement
  12. 12. Balance Sheet Netting
  13. 13. Financial Statement Presentation</li></ul>Proprietary and Confidential 7<br />
  14. 14. IFRS vs US GAPP<br />Proprietary and Confidential 8<br />
  15. 15. Financial Statements<br />Comparative Statements are required<br />Primary financial statements often include a separate column titled “notes”<br />Companies may choose the presentation format for the balance sheet<br />A=L + OE or A – L = OE<br />Decreasing or increasing order of liquidity<br />Statement of Comprehensive Income<br />One or two statements<br />No extraordinary items<br />Expenses may be based on function (e.g. CGS) or nature (e.g. advertising, salaries)<br />Proprietary and Confidential 9<br />
  16. 16. IFRS for SMEs<br />“Good Financial Reporting Made Simple.”<br />IFRS simplified for Private companies<br />Self-contained, comprehensive set of standards released in July 2009<br />230 pages – 34 topics – updated periodically<br />Simplified measurement and disclosures<br />Omits complex issues<br />Proprietary and Confidential 10<br />
  17. 17. IFRS for SMEs<br />What companies?<br /><ul><li>Definition is based on the ‘nature’ of the entity not the size
  18. 18. Any entity that does NOT have public accountability
  19. 19. Includes subsidiaries of public companies
  20. 20. US subsidiaries of foreign parents
  21. 21. It may be used in the US today.</li></ul>Proprietary and Confidential 11<br />
  22. 22. IFRS for SMEs<br />Differences with full IFRS<br />Goodwill and indefinite-lived intangibles are amortized over useful life or 10 years<br />ALL R & D are expensed<br />Differences with US GAAP<br />LIFO is not allowed, impairments of inventory may be reversed<br />All borrowing costs are expensed<br />Proprietary and Confidential 12<br />
  23. 23. Resources<br />IASB.org<br /><ul><li>Supported by IFRS Foundation and IASB
  24. 24. Full IFRS in multiple languages
  25. 25. IFRS for SMEs
  26. 26. Training modules and implementation guides</li></ul>IFRS.com<br /><ul><li>Supported by AICPA</li></ul>Wiki.ifrs.com<br /><ul><li>US GAAP – IFRS for SMEs comparison</li></ul>AICPA recently announced an IFRS certification that is earned on-line through 42 hours of CPE modules <br />Proprietary and Confidential 13<br />
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