jan engstrom
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International Financial Reporting Standards
The views expressed in this presentation are those of the presenter, not necessarily those of the IASC Foundation or the IASB
The Enduring Need for Strong International
StandardsJan Engstrom
Sao Paulo
September 2009
2The Vision
…one single set of high
quality global standards..
..used on the global
capital markets.
3Benefits to Capital Markets
• Credibility to foreign investors
• More cross-border investment
• Efficient capital allocation
• Facilitates global education and training
… and benefits to companies
4IASB structure 4
StandardsAdvisoryCouncil
Operations
International Accounting Standards
Board IFRIC
Staff: technical 50 + admin 30WorkingGroups
PublicationsXBRLEducation
International Accounting Standards Committee Foundation Trustees
International Monitoring
Board
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The world’s stock markets (US$ trillion)
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2005 2006 2007 2008 2009
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8The Financial Crises
• Financial Stability Board
– Reasons leading to the crises
– Actions needed
• G20
– Basically same conclusions
• Politician’s and regulator’s supervision failed
– Bonus systems
– Risk acceptance
– Decapitalising
9The Financial Crises – IASB actions
• Guidance – Fair values in illiquid markets
• Financial Crises Advisory Group
• Reclassification of financial instruments
• ED consolidations / ED derecognition
• FASB changed impairment rules
• G20 November 08 / April 09
• Replacement of financial instruments standard (#39)
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Replacement financial instruments standard (#39) - timetable
2008 IASC Foundation | 30 Cannon Street | London EC4M 6XH | UK | www.iasb.org
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Project phase Exposure Draft Finalisation
1. Classification and measurement
July 2009 In time for 2009 year end financial statements
2. Impairment methodology
October 2009 In 2010
3. Hedge accounting
December 2009 In 2010
* The above is in addition to a project on derecognition of financial instruments. ED Derecognition was published in March 2009.
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2009 IASC Foundation | 30 Cannon Street | London EC4M 6XH | UK | www.iasb.org
11Overview of model
Fair Value(= no impairment)
Amortised cost(one impairment
method)Managed on a contractual yield
basis
Basic loan features
+FVO for
accounting mismatch (option)
All other instruments:• Equities• Derivatives• Some hybrid contracts
Equities: OCI
presentation available(option)
12IASB Focus today
• The Financial Crises
• 2011
• SME
• Translations
• Constitutional review
• Agenda 2012 and forward
13Due process
Research
National
Standard
Setters
Discussion
Paper
Exposure
DraftStandard
Others
Comment
analysis
Comment
analysisEffective
Date
and
local
approval
process!
14Principle-based standards
PrinciplesPrinciples RulesRules
15A principle based standard
• No exceptions or inconsistencies
• Core principles
• Tied to conceptual framework
• Judgement
• Minimum guidance
• Few interpretation
16The Agenda
• Conceptual framework
• Revenue recognition
• Financial Statement Presentation
• Liabilities
• Insurance
• Fair value measurement
• Common control
• Emission rights trading
• Leasing
• Pensions
• Consolidations
• Management Commentary
• Small and Medium sized entities
• Financial instruments
• Short term converg.x 4
17The Agenda – together with FASB
• Conceptual framework
• Revenue recognition
• Financial Statement Presentation
• Liabilities
• Insurance
• Fair value measurement
• Common control
• Emission rights trading
• Leasing
• Pensions
• Consolidations
• Management Commentary
• Small and Medium sized entities
• Financial instruments
• Short term converg.x 4
18After approval of standard
• >1 year after publication before implementation
• Review 2 years after implementation
19Roadmap: “MOU 2006”
1. Short term
- remove major differences
2. Medium term
- new joint standards where significant improvement required
20US SEC
Changes:
- Regulation: removal of reconciliation 2007
- Concepts Release: IFRS available to US companies?
23Translations
• The IFRSs are translated to 50 languages
• One translation per language
• Now a special focus on Spanish:– Improved availability – All IASB’s documents (=DP, ED, IFRS, IFRIC)– An enlarged translation committee
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© 2008 IASC Foundation. First Floor | 30 Cannon Street | London EC4M 6XH | UK. www.iasb.org
• A codification used to electronically exchange financial information between businesses and users
• The IASC Foundation develops the IFRS Taxonomy (also for SMEs) which is the XBRL
representation of the IFRSs
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26IFRS for SMEs
• < 50,000 listed companies in the world
• Millions of SMEs– Suppliers, distributors, customers, ..
2727The Final IFRS for SMEs
Good Financial Reporting Made Simple.
• 230 pages• Simplified IFRSs - built on an IFRS
foundation• Suitable for entities that are not listed
and not financial institutions• Standalone product that sits side-by-side
with the full set of IFRSs
28Two general problems for IASB
• Principles v rules
• Acceptance of Standards
– EU?!
– SEC!
– Japan?
– Others??
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