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The Future of International Financial Reporting

The Future of International Financial Reporting. Sir David Tweedie IASB Chairman. Need for Convergence. Attracting investment through transparency Reducing the cost of capital Increasing world-wide investment Reducing costs. IASC Developments. Improvements Project. IASC Developments.

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The Future of International Financial Reporting

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  1. The Future of International Financial Reporting Sir David TweedieIASB Chairman

  2. Need for Convergence • Attracting investment through transparency • Reducing the cost of capital • Increasing world-wide investment • Reducing costs

  3. IASC Developments • Improvements Project

  4. IASC Developments • Improvements Project • IOSCO Agreement

  5. IASC Developments • Improvements Project • IOSCO Agreement • The Restructuring

  6. IASB Structure 19 Trustees Standards Advisory Council IASB IFRIC National Standard Setters

  7. IASC Developments • Improvements Project • IOSCO Agreement • The Restructuring • EU 2005

  8. IFRS Around the World CountriesChange Total in 2005in 2006in 2006 IFRSs permitted 23 0 23 IFRSs required 65 +1 66 (for all domestic companies) IFRS required6 0 6 (for some domestic companies) 94+195

  9. Role of National Standard Setter • Deal with national issues • Align agenda • Influence IASB debate • Lead on certain issues

  10. The Agenda • Improvements • IFRS I

  11. Insurance Extractive Industries Grandfather Standards

  12. Share Based Payments • Company not party to transaction • Employees do not provide services • No cost to company • EPS hit twice • Adverse economic consequences

  13. FASB/IASB Agreement • Remove differences • Align Agendas • Interpretation

  14. Convergence Short-term Differences IASB – - Business combinations (goodwill/brands, acquisitions, IPR&D) - Asset Disposals and Discontinued Operations (IFRS 5) - Provisions (soon)

  15. Convergence FASB - - EPS - Voluntary changes in accounting policy - Exchanges of non-monetary assets - Inventory spoilage and idle capacity - Share options

  16. Conceptual Framework Issues • The objectives of financial reporting • Qualitative characteristics • Definitions of assets and liabilities • Recognition • Measurement • Presentation

  17. DR = CR

  18. Dr = Asset or Expense

  19. Dr = Asset or Expense or Whatsit

  20. Reconciliation Plan – Short Term IASB - Borrowing costs - Government grants - Joint ventures - Segments Joint - Impairment - Income Taxes

  21. Reconciliation Plan – Short Term FASB - Fair value option - Investment properties - R&D - Subsequent events Joint - Impairment - Income taxes

  22. Reconciliation – Major Projects • Business combinations • Consolidations/SPV • Financial Instruments • Derecognition • Fair value measurement • Revenue Recognition

  23. Reconciliation – Major Projects (cont) • Liability and Equity • Leases • Intangibles • Performance Reporting • Pensions

  24. Performance Reporting • Statements • Comprehensive income/Cash flows • Recycling • Remeasurement MD&A

  25. Pensions £m Deficit 10 Less 10% of liabilities 4 6 Spread over 10 year working life Deficit per accounts - £600,000

  26. Problems for IASB • Principles v rules

  27. Problems for IASB • Principles v rules • Acceptance of Standards • EU • SEC

  28. Problems for IASB • Principles v rules • Acceptance of Standards • EU • SEC • Enforcement

  29. Other Projects • Insurance • Financial Risk Disclosure (IASB) • SMEs (IASB)

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