IASB Flashcards
IASB established in 2001
International Accounting Standard Board
Replaces the IASC which set standards from 1973 to 2001 (IASs)
Establishes IFRS
IFRS is based on framework
No enforcement power, which is enforce by the securities regulators in national jurisdictions
IFRS
Is a principle base standars (US GAAP is ruled based)is an application of the measurement (how much)or recognition (when) related to inventory, intangibles, fixed asst etc
Objectives of IASB
To develop as a single set of high quality understandable enforceable and globally accepted financial reporting standards
To promote the use and rigorous application of IFRS
To consider the needs of a range of size and type of entities
To promote and facilitate adoption of IFRS through covergence
IFRS hierarchy
Level 1 IFRSs and implementation guidance dealing w.specific issue or similar situations
Level 2 Definitions recognition criteria and measurement concepts for A, L, income and exp in the framework
Level 3 Pronouncements from other standard bodies using a similar framework
IFRS developing standards
A.-standars settins is similar to FASB Add item to agenda Discussion issue Publish a discussion paper if the topic is difficult Prepare and vote on the Exposure draft Issue the exposure draft analyze comments on the exposure draft Debate the issue at hand B.- US GAAp is precise and provides conservative guidance, wheareas theIFRS allows for subjectivityin many areas & provides general qualitative guidance. Standard size volume of IFRS 3000 pages US GAAP 17000 pages
Norwalk agreement signed in 2002
formalized the FASB and IASB commitment to convergence
accounting Standards Convergence
in 2007 SEC eliminated the requirement to reconcile from IGAAP to US GAAP/form 20-F
The convergence of the IFRS and FASB Standards is ongoing
IOSCO
International Organization of Securities Commissions
is the recognized international standard setter for securities markets
Financial Stme presentation
US GAAP IFRS
no comparative info reqrd – Require comprtv info for prio yr
Subsequent events evalua - Subsq events evaluated throug
ted though the FS issuance h FS authorization to be issued
date date
Conslidated Financial Statements
US GAAP IFRS
No exemption from consolidt -under certain restrictions
subsidiaries in gen purpose subsidiary exempt from the
FS requirement (consolidated)
Non controlling interest - may be measured either at FV
measurd at FV incld GW incld GW or the proportionate
share of value of A,L excld GW
FV option allowed for FV option prohibited for
equity method invstm and equity method invstm and
Join Venture Join Venture
Current Assets and Liabilities
US GAAP IFRS
Short term oblig expect to - Can be classify as non current
be refinanced can be only id the entity enterd into a
classified as non-current if agreemt to refin prior to BS dat
the intent and ability to refi e
Contingecies that are probable (>50%) are considr
probable (>70%) can be provisions and are accrued
reazonably estimated are
accrued
For contingencies Accr Accrued the midpoint in a range
minimun in a range if no amt is more likely than
if no amt is more likely another
than another
Inventory
US GAAP IFRS
LIFO is accepted LIFO not accepted
Impairment wridte downs Previously recogz impairmt
create a new cost basis are reversed
Previously recognz imprt
losses are Note reverse
Fix assets
US GAAP IFRS
Revaluation NOT permited permited but must be consiste
No separate Acct for Invst separate acct
Unless held for sale they Invstm property may be
valued using the cost measured at FV
model
Two step impairmt approach - 1 step
Impairment is a function - is a function of recoverable
of FV and carrying value amt and carrying value
Impairment losses not - Impairment losses
reversed reversed
What is simplyfy for Small to medium entities in IFRS
Revisions happen every three years at most
- irrelevant topics are eliminated
-Recognition and measurement are simplifiy
-disclosures reduced by 10%
Exp:
Goodwill is amortized
All Research and Develop is expensed
Categories of invetmt are reduced
Less prior yr data is required for first time adoption
ommited topics for small and medium sized entities on IFRS
Earnings per share
Interim financial reporting
Segment reporting
IASF Framework
The AISB framework is intended to apply to the FS of all entities public or private
Is a point of reference for prepares in the absence of specific guidance in IFRS
Purposes of IASF
- Assit the board to develop new IASs
- Promote harmonization of standards
- Assist and provide information to interested parties
Objective if IFRS
is to provide FS that present a true and fair view of the entities performance to aid external user decision making
Primary Characteristics
FARR
Faitfhful representation and relevance
Completness Predictive value
Neutrality confirmatory value
Free from error materiality
AISB assumptions
1 Accrual method is used
2. The entity is a going concern
Differences on the elements of FS
AISB only five elements
Assets” Resource controlled as a result of past event to expec future economic benefits
Liabilities”present obligation arinsing from past events to expect a result of an outflow
equity:residual interest of an assed less liabil
Income: Increases in economic benefits from incrs in A or decreases in liab- Diff IFRS rev incl gains FASB are two separate elements
expenses:decreases in economic benefits from decrs in A or increases in liab - Diff IFRS exp includes losses in FASB are separate elements
who can report under IFRS for SMEs
any entity that does not have public accountability, not a financial institution , not publicly traded
And is required or chooses to produce general purpose
FS, to present fairly Finc position result of operations and CF
IFRS for SMEs cannot be used by fudiciary entities, like banks, insurance co, pension funds.
IFRS for SMEs considered to be GAAP?
Yes the AICPA regognizes the IASB as an accounting body for purposes of stablishing IFAR principles, for a qualigying company, essentialy a private entiry
Differences from IFRS from IFRS for SMEs
-Disclosures are simplify in areas includ pensions, leases, and finc instruments
-Goodwill and indefinite life of intangible assets are amortize over a period not exceeding 10 year
-Simplify approach to inc tax acct
-Financial assts and Liab makes greater use of cost
(derivatives)
-No disclosure of EPS or information by segment
What GAAps may be used by a US entity
Depending on the entity:
- GAAP
- US other Comprehensive basis of acct (OCBOA)
- International Financial Reporting Standards IFRS
- IFRS for small medium sized entities SMEs
Under IFRS for SMEx which cost flow asumptions in invetory can be used
FIFO and
Weigted Average Cost
Methods used unde IFRS for SMEs
Cost Method
Equity Method
