IFRS - International Financial Reporting Standards

Question 1

IASB - International Accounting Standards Board

Answer 1

Entity that establishes IFRS - independent standard-setting entity
No enforcement power

in existence since 2001

Question 2

IFRS Structure

Answer 2

IFRS Foundation Monitoring Board….(public accountability)
Appoints
IFRS Foundation Trustees….(governance/oversight)
which are a part of the
IFRS Foundation…..(22 trustees)(std setting)
Foundation oversees the IASB, IFRS interpretations committee

ALSO receives inout from ASAF - Accounting Standards Advisory Forum, and the IFRS Advisory Council

Question 3

INTERNATIONAL GAAP Hierarchy

Answer 3

Level 1: IFRSs/Implementation guidance

Level 2: Definitions, recognition criteria, concepts

Level 3: Other standards

Question 4

IFRS in General

Answer 4

Less detailed than GAAP
Fewer Rules 
Requires more professional judgement 
Less literature to address exceptions 
*ALSO has guidance for SMEs (just like our version of the PCC)

Question 5

SME Reporting

Answer 5

Eliminates topics that are not relevant
Simplifies recognition and measurement
Disclosures are reduced
Revisions only once every 3 years

Question 6

Development process (IFRS standards)

Answer 6

Research 
Discussion Paper
Proposal 
Exposure Draft (vetted)
Published IFRS (after possible edits)
Post Implementation Review

Question 7

Norwalk Agreement

Answer 7

2002

Between FASB / IASB to commit to convergence

Question 8

2007

Answer 8

SEC Eliminated the requirement to reconcile from international GAAP to US GAAP

This made it a lot easier for foreign companies to list on US exchanges

Question 9

IASB Framework

Answer 9

Similar to FASB

Point of reference for preparers in the absense of specific guidance

OBJECTIVE is to present f/s that are TRUE and FAIR (vs. decision usefulness)

Primary Characteristics: Faithful Rep (comlete, neutral, free of error)
Relevance (predictive, confirmatory, materiality)

ASSUMPTIONS: 1. Accrual Method 2. Going concern

Question 10

IFRS SMEs

Answer 10

Why? A LOT of small/medium companies (230pages vs 2,00o ish)

Who? ANY entity w/o public accountability and chooses to produce gen. purpose f/s

IS CONSIDERED GAAP for qualified companies; not OCBOA

MUST be applied in entirety

• *IF no guidance then management will use judgement (often from “BIG” GAAP guidance)
• **US companies can USE this if qualify

CANNOT USE: public companies, or hold assets in a fiduciary capacity - so banks ins. company, mutual fund, nfp)

Question 11

IFRS BIG vs. SME

Answer 11

SME:

• disclosures are simplified
• goodwill/ indefinite life intangible assets are amortized - simplified
• simplified approach in determining differences to inc. tax accounting
• greater use of cost basis for a/l
• no disclosures for EPS and segment disclosures
• CANNOT use LIFO
• GOODWILL must be amortized
• COST or EQUITY method (vs only Equity in US GAAP)