so sánh US GAAP với IFAS

US GAAP versus IFR S The basics November 2012 !@# Table of contents Introduction Financial statement presentation Interim financial reporting Consolidation, joint venture accounting and equity method investees/associates Business combinations 12 Inventory 14 Long-lived assets 15 Intangible assets 17 Impairment of long-lived assets, goodwill and intangible assets 19 Financial instruments 22 Foreign currency matters 28 Leases 30 Income taxes 33 Provisions and contingencies 35 Revenue recognition 37 Share-based payments 39 IntroductionEmployee benefits other than share-based payments 41 Earnings per share 43 Segment reporting 44 Subsequent events 45 Related parties 47 Appendix — The evolution of IFRS 48 US GAAP versus IFRS The basics Introduction Convergence continued t o be a high priority on the agendas of bot h the US Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) (collectively, the Boards) in 2012 However, the convergence process is designed t o address only the mos t significant differences and/ or areas t hat the Boards have identified as having the greatest need for improvement While the converged standards will be m or e similar, differences will continue t o exist between US GAAP as promulgated by the FASB and International Financial Reporting Standards (IFRS) as promulgated by the IASB In this guide, we provide an overview by accounting area of where the standards are similar and where differences exist We believe that any discussion of this topic should not lose sight of the fact that the t w o sets of standards are generally m ore alike than different for most commonly encountered transactions, wit h IFRS being largely, but not entirely, grounded in the same basic principles as US GAAP The general principles and conceptual framework are often the same or similar in both sets of standards, leading t o similar accounting results The existence of any differences — and their materiality t o an entity’s financial statements — depends on a variety of specific factors, including the nature of the entity, the details of the transactions, interpretation of the m ore general IFRS principles, industry practices and accounting policy elections where US GAAP and IFRS offer a choice This guide focuses on differences most commonly found in present practice and, when applicable, provides an overview of how and when those differences are expected t o converge KeyFinancial updates statement presentati on Our analysis generally reflects guidance effective in 2012 and finalized by the FASB and the IASB before 31 May 2012; however, we have not included differences related t o IFRS , Financial Instruments, IFRS , Consolidated Financial Statements and IFRS 11 , Joint Arrangements, except in our discussion of convergence We will continue t o update this publication periodically f or new developments * * * Identifier Tool was developed as a resource for companies that need t o analyze the numerous accounting decisions and changes inherent in a conversion t o IFRS Conversion is of course more than just an accounting exercise, and identifying accounting differences is only the first step in the process Successfully converting t o IFRS also entails ongoing project management, systems and process change analysis, tax considerations and a review of all company agreements that are based on financial data and measures Ernst & Young’s assurance, tax and advisory professionals are available t o share their experiences and t o assist companies in analyzing all aspects of the conversion process, f rom the earliest diagnostic stages through ultimate adoption of the international standards * * The Ernst & Young ―US GAAP-IFRS Differences Identifier Tool‖ provides a more in-depth review of differences between US GAAP and IFRS The To learn more about the Identifier Tool, please contact your local Ernst & Young professional November 2012 US GAAP versus IFRS The basics Financial statement presentation required Generally, comparative financial Similarities changes in shareholders’ equity t o be presented in the notes t o the financial statements while There are many similarities in US GAAP and IFRS requires the changes in shareholders’ IFRS guidance on financial statement and income statement No general requirement withi equity t o be presented as a separate statement presentation Under both sets of standards, Further, both require that the financial the components of a complete set of financial n statements be prepared on the accrual basis statements include: a statement of financial of accounting (with the exception of the cash position, a statement of profit and loss flow statement) except for rare circumstances (i.e., income statement) and a statement of Both sets of standards have similar concepts comprehensive income (either a single regarding materiality and consistency that continuous statement or t w o consecutive entities have t o consider in preparing their statements), a statement of cash flows and financial statements Differences between the accompanying notes t o the financial t w o sets of standards tend t o arise in the level statements Both standards also require the of specific guidance provided changes in shareholders’ equity t o be presented However, US GAAP allows the Significant differences US GAAP Financial periods IFRS Layout of balance sheet statements are presented; however, a single year may be presented in certain circumstances Public companies must follow SEC rules, which typically require balance sheets for the two most recent years, while all other statements mu st cover the three-year period ended on the balance sheet date US GAAP to prepare the balance sheet and income statement in accordance with a specific layout; however, public companies m u st follow the detailed requirements in Regulation S-X Comparative information m u st be disclosed with respect t o the previous period fo r all amounts reported in the cur rent period’s financial statements IFRS does n ot prescribe a standard layout, but includes a list of m inimum line items These m in im um line items are less prescriptive than the requirements in Regulation S-X Balance sheet — presentation o f debt as cur rent versus non-current Debt fo r which there has been a covenant violation m ay be presented as non-current if a lender agreement to waive the right t o demand repayment fo r m or e than one year exists before the financial statements are issued o r available t o be issued Debt associated with a covenant violation must be presented as current unless the lender agreement was reached prior to the balance sheet date US GAAP IFRS Balance sheet — Current or non-current classification, classification o f deferred generally based on the nature o f the tax assets and liabilities related asset or liability, is required All amounts classified as non-current in the balance sheet Income statement — classification o f expenses No general requirement within US Entities m ay present expenses based o n GAAP t o classify income statement either function o r nature (e.g., salaries, items by function o r nature However, depreciation) However, if function is SEC registrants are generally required selected, certain disclosures about the t o present expenses based on function nature o f expenses must be included in (e.g., cost o f sales, administrative) the notes Income statement — extraordinary items criteria Restricted t o items that are both unusual and infrequent Income statement — discontinued operations criteria Discontinued operations classification is fo r components held fo r sale o r disposed of, provided th at there will n o t be significant continuing cash flows o r involvement with the disposed component Discontinued operations classification is fo r components held fo r sale o r disposed o f th at are either a separate major line of business o r geographical area or a subsidiary acquired exclusively with an intention to resell Disclosure o f performance measures No general requirements within US GAAP th at address the presentation o f specific performance measures SEC regulations define certain key measures and require the presentation o f certain headings and subtotals Additionally, public companies are prohibited f r o m disclosing non-GAAP measures in the financial statements and accompanying notes Certain traditional concepts such as ―operating profit‖ are n ot defined; therefore, diversity in practice exists regarding line items, headings and subtotals presented on the income statement IFRS permits the presentation o f additional line items, headings and subtotals in the statement o f comprehensive income when such presentation is relevant t o an understanding of the entity’s financial performance Third balance sheet Not required A third balance sheet is required as o f the beginning o f the earliest comparative period when there is a retrospective application o f a new accounting policy, o r a retrospective restatement o r reclassifications that have a material effect on the balances o f the third balance sheet Related notes t o the third balance sheet are n o t required Prohibited US GAAP versus IFRS The basics Financial statement presentation US GAAP versus IFRS The basics Financial statement presentation Interim financial reporti ng The Boards have also delayed wo rk on Convergence Convergence efforts in this area have been put on hold and f urt her action is not expected in the near term The Boards suspended their efforts on the joint project on financial statement presentation so they could focus on priority convergence projects Before putting the project on hold, the Boards issued a staff draf t of the proposed standards and engaged in a targeted outreach program their efforts t o converge presentation of discontinued operations The Boards tentatively decided that the definition of discontinued operations would be consistent with the c urrent definition in IFRS , Non-current Assets Held f or Sale and Discontinued Operations, and t hat certain requirements in existing US GAAP f or discontinued operations classification (i.e., elimination of cash flows of the com ponent and prohibition of significant continuing involvement) would be eliminated, although disclosure of those and additional items would be required There have been no furt he r developments on this topic US GAAP versus IFRS The basics Interim financial reporting Similarities allow f or condensed interim financial Consolidation, joint venture accounting statements and provide f or similar disclosure ASC 270, Interim Reporting, and IAS , requirements Neither standard requires Interim Financial Reporting, are substantially and entities t o present interim financial information similar except for the treatment of certain costs described below Both require an entity t o apply the accounting policies that were in effect in the prior annual period, subject t o the adoption of new policies that are disclosed Both standards That is the purview of securities regulators such as the SEC, which requires US public companies t o comply with Regulation S-X Significant differences US GAAP IFRS Treatment of certain integral part o f an annual period As a result, certain costs that benefit mo re than one interim period ma y be allocated among those periods, resulting in deferral o r accrual o f certain costs costs in interim periods Each interim period is viewed as an Each interim period is viewed as a discrete reporting period A cost that does not meet the definition of an asset at the end o f an interim period is n ot deferred, and a liability recognized at an interim reporting date mu st represent an existing obligation Income taxes are accounted fo r based on an annual effective tax rate (similar to US GAAP) Convergence The FASB planned t o address presentation and display of interim financial information in US GAAP as part of the joint financial statement presentation project As noted in the Financial statement presentation section, f urt her action is not expected on this project in the near t erm US GAAP versus IFRS The basics Consolidation, joint venture accounting and equity me thod investees/associates equity method investees/associates US GAAP versus IFRS The basics 38 Share-based payments Share-based payments Similarities The US GAAP guidance f or share-based payments, ASC 718, Compensation — Stock Compensation, and ASC 5 - , Equity — Equity-Based Payments t o Non-Employees, is largely converged with the guidance in IFRS , and IFRS define the fair value of the transaction t o be the am ount at which the asset or liability could be bought or sold in a current transaction between willing parties Further, they require the fair value of the shares t o be measured based on a market price (if available) or estimated using an option-pricing model In the rare cases in which fair value cannot be US GAAP Transactions with non-employees IFRS The US GAAP definition o f an employee focuses primarily on the co mm on law definition of an employee IFRS has a mo re general definition o f an employee tha t includes individuals wh o provide services similar to those rendered by employees Either the fair value of: (1) the goods o r services received, o r (2) the equity instruments granted is used t o value the transaction, whichever is m or e reliably measurable Fair value of the transaction should be based o n the fair value o f the goods o r services received, and only o n the fair value of the equity instruments granted in the rare circumstance th at the fair value of the goods and services cannot be reliably estimated Measurement date is the earlier of: Measurement date is the date the entity obtains the goods o r the counterparty renders the services No performance co mm itm en t concept exists (1) the date at which a ―commitment Significant differences fo r pe rfo rmance‖ by the counterparty is reached, o r (2) the date at which the counterparty’s performance is complete Share-Based Payment Both require a fair value-based approach in accounting f or share-based paym ent arrangements whereby an entity (1) acquires goods or services in exchange f or issuing share options o r ot her equity instruments (collectively referred t o as ―shares‖ in this guide), or (2) incurs liabilities t hat are based, at least in part, on the price of its shares or t hat m ay require settlement in its shares Under bot h US GAAP and IFRS, this guidance applies t o transactions wit h bot h employees and non-employees and is applicable t o all companies Both ASC 718 determined, both sets of standards allow the use of intrinsic value, which is remeasured until settlement of the shares In addition, the treatm ent of modifications and settlements of share-based payments is similar in many respects Finally, both standards require similar disclosures in the financial statements t o provide investors with sufficient information t o understand the types and extent t o which the entity is entering into share-based payment transactions US GAAP versus IFRS The basics 39 Share-based payments US GAAP IFRS Measurement and recognition of expense — awards with graded vesting features Entities make an accounting policy election t o recognize compensation cost for awards containing only service conditions either o n a straight-line basis o r on an accelerated basis, regardless of whether the fair value of the award is measured based o n the award as a whole or for each individual tranche Entities must recognize compensation cost on an accelerated basis and each individual tranche mu st be separately measured Equity repurchase features a t employee’s election Liability classification is not required if employee bears risks and rewards o f equity ownership fo r a t least six months f r o m the date the shares are issued o r vest Liability classification is required (no six-month consideration exists) Deferred taxes Calculated based on the cumulative GAAP expense recognized and trued up o r down upon realization o f the tax benefit If the tax benefit exceeds the deferred tax asset, the excess (―windfall benefit ‖) is credited directly t o shareholders equity Any shortfall of the tax benefit below the deferred tax asset is charged to shareholders equity to the extent of prior windfall benefits, and to tax expense thereafter Modification o f vesting term s tha t are improbable of achievement If an award is modified such that the service o r performance condition, which was previously improbable of achievement, is probable of achievement as a result o f the modification, the compensation cost is based on the fair value of the modified award at the modification date Grant date fair value of the original award is not recognized Calculated based on the estimated tax deduction determined a t each reporting date (e.g., intrinsic value) If the tax deduction exceeds cumulative compensation cost, deferred tax based on the excess is credited to shareholders equity If the tax deduction is less than or equal t o cumulative compensation cost, deferred taxes are recorded in income Probability o f achieving vesting term s before and after modification is n ot considered Compensation cost is the grant date fair value o f the award, together with any incremental fair value at the modification date Convergence No f urt her convergence is planned at this time US GAAP versus IFRS The basics 40 Employee benefits othe r than share-based payments Employee benefits other th share-based payments (subsequent to the adoption of IAS amendments, Employee Benefits an ) Similarities ASC 715, Compensation — Retirement Benefits, and ASC 712, Compensation — Nonretirement Post-Employment Benefits, and IAS 19, Employee Benefits, as amended, are the principal sources of guidance for employee benefits ot her than share-based payments under US GAAP and IFRS, respectively Under bot h US GAAP and IFRS, the net periodic benefit cost recognized f or defined contribution plans is based on the contribution due f r om the employer in each period The accounting f or defined benefit plans has many similarities as well The defined benefit obligation is the present value of benefits that have accrued t o employees through services rendered up t o t hat date, based on actuarial methods of calculation Both US GAAP and IFRS require the funded status of the defined benefit plan t o be recognized on the balance sheet as the difference between the present value of the benefit obligation and the fair value of plan assets, although IAS 19 limits the net plan asset recognized for overfunded plans Significant differences US GAAP Actuarial m et ho d used depending on the characteristics of the fo r defined benefit plans methods are plan’sDifferent benefit formula IFRS Projected unit credit method is required in all cases required Calculation o f the expected return on plan assets Based o n either the fair value o f plan assets o r a ―calculated va lue‖ th at smoothes the effect o f short-term market fluctuations over five years Limited to the ―net interest‖ on the net defined benefit liability (asset) calculated using the benefit obligation’s discount rate Treatment of actuarial gains and losses in net income May be recognized in net income as they occur o r deferred throu gh a corridor approach Must be recognized immediately in other comprehensive income Gains and losses are n ot subsequently recognized in net income Recognition of pr ior service costs f r o m plan amendments Initially deferred in other comprehensive income and subsequently recognized in net income over the average remaining service period of active employees or, when all o r almost all participants are inactive, over the average remaining life expectancy o f those participants Immediate recognition in net income fo r vested and unvested benefits Settlements and curtailments recognized when the obligation is settled Settlement or loss is when Curtailment lossesgain are recognized the curtailment is probable of occurring, while curtailment gains are recognized when the curtailment occurs Gain o r loss f r o m settlement is recognized when it occurs Change in the defined benefit obligation fr o m a curtailment is recognized at the earlier o f when it occurs o r when related restructuring costs or termination benefits are recognized US GAAP versus IFRS The basics US GAAP Multi-employer pension plans 41 IFRS Accounted fo r similar t o a defined contribution plan Plan is accounted fo r as either a defined contribution o r defined benefit plan based on the terms (contractual and constructive) o f the plan If a defined benefit plan, mu st account fo r the proportionate share o f the plan similar t o any other defined benefit plan unless sufficient information is not available Employee benefits othe r than share-based payments Convergence No f urt her convergence is planned at this time US GAAP versus IFRS The basics 42 Earnings per share Earnings per shar e Similarities Entities whose c omm on shares are publicly traded, or t hat are in the process of issuing such shares in the public markets, m us t disclose substantially the same earnings per share (EPS) information under ASC 260 and IAS 33 (both titled Earnings Per Share) Bot h and diluted EPS on the face of the income statement, and bot h use the treasury stock met hod f o r determining the effects of stock options and warrants in the diluted EPS calculation Although both US GAAP and IFRS use similar methods of calculating EPS, there are a f ew detailed application differences standards require the presentation of basic Significant differences US GAAP IFRS Contracts tha t m ay be settled in shares or cash a t the issuer’s option Such contracts are presumed t o be settled in shares unless evidence is provided to the contrary (i.e., the issuer’s intent o r stated policy is t o settle in cash) Such contracts are always assumed to be settled in shares Computation o f year-to-date and annual diluted EPS fo r options and warrants (using the treasury stock method) and fo r contingently issuable shares For year-to-date and annual computations when each period is profitable, the numbe r o f incremental shares added to the denominator is the weighted average of the incremental shares th at were added t o the denominator in each of the quarterly computations Regardless o f whether the period is profitable, the numbe r o f incremental shares is computed as if the entire year-to-date period were ―the per io d‖ (that is, n ot average the current quarter with each of the prior quarters) Treatment of contingently convertible debt Potentially issuable shares are included in diluted EPS using the ―if-converted‖ m et ho d if one o r mo re contingencies relate t o a market price trigger (e.g., the entity’s share price), even if the market price trigger is not satisfied a t the end o f the reporting period Potentially issuable shares are considered ―contingently issuable‖ and are included in diluted EPS using the if-converted metho d only if the contingencies are satisfied a t the end o f the reporting period Convergence The Boards previously began a s hort-term convergence project on earnings per share, but now consider the project a lower priority and not expect further action in the near term US GAAP versus IFRS The basics 43 Segment reporting Subsequent Segment reportin event Similarities g s The requirements f o r segment reporting under bot h ASC 280, Segment Reporting, and IFRS , Operating Segments, apply t o entities wit h public reporting requirements and are based on a ―management approac h‖ in identifying the reportable segments The t w o standards are largely converged, and only limited differences exist Significant differences US GAAP IFRS Determination of segments of Disclosure requirements organization (i.e., in some public entities, the chief operating decision maker (CODM) is responsible fo r different product and service lines Entities with a ―matrix‖ worldwide, while other CODMs are form responsible fo r specific geographic areas) must determine segments based o n products and services Entities are n ot required to disclose segment liabilities even if reported t o the CODM All entities determine segments based on the management approach, regardless o f fo r m o f organization If regularly reported t o the CODM, segment liabilities are a required disclosure Convergence No f urt her convergence is planned at this time US GAAP versus IFRS The basics Subsequent events Similarities 44 Despite differences in terminology, the accounting for subsequent events under ASC 855, Subsequent Events, and IAS , Events after the Reporting Period, is largely similar A n event that occurs during the subsequent events period that provides additional evidence about conditions existing adjustment t o the financial statements If the event occurring after the balance sheet date but before the financial statements are issued relates t o conditions that arose after the balance sheet date, the financial statements are n ot adjusted, but disclosure m ay be necessary t o keep the financial statements f r om being misleading at the balance sheet date usually results in an Significant differences US GAAP Date throu gh which subsequent events must be evaluated Subsequent events are evaluated through the date the financial statements are issued or available to be issued Financial statements are considered issued when they are widely distributed t o shareholders or other users in a fo r m that complies with US GAAP Financial statements are considered available to be issued when they are in a fo r m that complies with US GAAP and all necessary approvals have been obtained SEC registrants and conduit-bond obligors evaluate subsequent events through the date the financial statements are issued, while all other entities evaluate subsequent events through the date that the financial statements are available t o be issued IFRS Subsequent events are evaluated through the date tha t the financial statements are ―authorized for issue.‖ Depending on an entity’s corporate governance structure and statutory requirements, authorization may come f r o m management o r a board of directors US GAAP versus IFRS The basics Subsequent events 45 US GAAP IFRS Reissuance o f financial events o r transactions ma y have Related partie occurred that require disclosure in the reissued financial statements to keep s them from being misleading However, statements reissued, Short-term loans refinanced with long-term loans after balance sheet date an entity should n ot recognize events occurring between the t ime the financial statements were issued o r available to be issued and the time the financial statements were reissued unless the financial adjustmentstatements is required byare If the US GAAP o r regulatory requirements (e.g., stock splits, discontinued operations, or the effect of adopting a ne w accounting standard retrospectively would give rise to an adjustment) Entities m u st disclose bo th the date th at the financial statements were originally issued and the date that they were reissued if the financial statements were revised due to an error correction or retrospective application o f US GAAP Short-term loans are classified as long-term if the entity intends t o refinance the loan on a long-term basis and, pr ior t o issuing the financial statements, the entity can demonstrate an ability to refinance the loan by meeting specific criteria IAS 10 does not specifically address the reissuance o f financial statements and recognizes only one date through which subsequent events are evaluated, that is, the date that the financial statements are authorized for issuance, even if they are being reissued As a result, only one date will be disclosed with respect t o the evaluation o f subsequent events, and an entity could have adjusting subsequent events in reissued financial statements If financial statements are reissued, the date the reissued statements are authorized for reissuance is disclosed Short–t e r m loans refinanced a fter the balance sheet date ma y not be reclassified t o long-term liabilities unless the entity expected and had the discretion to refinance the obligation fo r at least 12 months a t the balance sheet date Convergence No f urt her convergence is planned at this time US GAAP versus IFRS The basics Related parties Similarities The reporting objective of both ASC 850 and 46 IAS 24 (both titled Related Party Disclosures) is t o make financial statement users aware of the effect of related-party transactions on the financial statements The definitions of a related part y are broadly similar, and both standards require that the nature of the relationship, a description of the transaction Appendix — The evolution of IF outstanding balances) be disclosed for related party transactions Neither standard contains RS any measurement or recognition requirements for related-party transactions ASC 850 does not require disclosure of compensation of key management personnel as IAS 24 does, but the financial statement disclosure requirements of IAS 24 are similar t o those required by the SEC outside the financial statements and the amounts involved (including Significant differences US GAAP Scope ASC 850 requires disclosure o f all material related party transactions, other than compensation arrangements, expense allowances and other similar items in the ordinary course o f business IFRS IAS 24 provides a partial exemption f r o m the disclosure requirements fo r transactions between government-related entities as well as with the government itself Convergence No f urt her convergence is planned at this time US GAAP versus IFRS The basics Appendix — The evolution o f IFRS 47 This appendix summarizes key events in the evolution of international accounting standards Phase I — The early years • 1973: International Accounting Standards Committee (IASC) formed The IASC was founded t o formulate and publish International Accounting Standards (IAS) t hat would improve financial reporting and t hat could be accepted worldwide In keeping with the original view t hat the IASC’s function was t o prohibit undesirable accounting practices, the original IAS permitted several alternative accounting treatments • 1999: IASC Board approved a restructuring that resulted in the current International Accounting Standards Board (IASB) The newly constituted IASB structure comprises: (1) the IASC Foundation, an independent organization with 22 trustees who appoint the IASB members, exercise oversight and raise the funds needed, (2) the IASB (Board), which has 12 full-time, independent board members and t w o part-time board members with sole responsibility for setting • 1994: IOSCO (International Organizatio accounting standards, (3) the Standards n Advisory Council and (4) the International Financial Reporting Interpretations of Securities Commissions) completed Committee (IFRIC) (replacing the SIC) and its review of IASC standards and is mandated wit h interpreting existing IAS communicated its findings to the IASC and IFRS standards, and providing timely The review identified areas that required guidance on matters not addressed by improvement before IOSCO would consider current standards recommending IAS f o r use in cross-border listings and offerings • 2000: IOSCO recommended that • 1994: IASC Advisory Council formed to multinational issuers be allowed to use oversee the IASC and manage its finance IAS in cross-border offerings and listings s • April 2001: IASB assumed • 1995: IASC developed its Core Standard standard-setting responsibility The IASB m e t with representatives f rom eight national s standard-setting bodies t o coordinate Work Program IOSCO’s Technical agendas and discuss convergence, and Committee agreed that the Work Progra adopted existing IAS standards and SIC m Interpretations would result, upon successful completio • February 2002: IFRIC assumed n, responsibility for interpretation of IFRS in IAS comprising a comprehensive core set of standards The European Commission (EC) supported this agreement between IASC and IOSCO and ―associated itself‖ with the work of the IASC t oward international harmonization of accounting standards • 1997: Standing Interpretations Committee (SIC) established to interpret IAS US GAAP versus IFRS The basics Appendix — The evolution o f IFRS 48 Phase II — 2002 to 005 Phase III — 2006 to present • July 2002: EC required EU-listed companies to prepare their consolidated • February 2006: FASB and IASB published financial statements in accordance with a Memorandum of Understanding (MOU) IFRS as endorsed by the EC, generally The MOU reaffirmed the Boards’ shared from 2005 onward This was a critical objective t o develop high quality, comm on milestone t hat drove the expanded use accounting standards, and furt her of IFRS elaborated on the Norwalk Agreement The Boards agreed t o proceed along t w o tracks: • September 2002: FASB and IASB (1) a series of short-term projects designed execute the Norwalk Agreement and t o eliminate major differences in focused document a Memorandum of areas and (2) the development of new Understanding The Boards agreed t o use comm on standards f or accounting practices best efforts t o make their existing standards regarded as candidates for improvement fully compatible as soon as practicable and t o coordinate fut ure wo rk programs • December 2004: EC issued its Transparency Directive This directive required non-EU companies wit h listings on an EU exchange t o use IFRS unless the Committee of European Securities Regulators (CESR) determined t hat national GAAP was ―equivalent‖ t o IFRS CESR said in 2005 that US GAAP was ―equivalent,‖ subject t o certain additional disclosure requirements • April 2005: SEC published the “Roadmap.” An article published by the SEC Chief Accountant discussed the possible elimination of the US GAAP reconciliation f o r foreign private issuers t hat use IFRS by 2009, if not sooner • August 2006: CESR/SEC published a joint work plan The regulators agreed t hat they could share issuer-specific matters, following set protocols, and that their regular reviews of issuer filings would be used t o identify IFRS and US GAAP areas t hat raise questions about quality and consistent application • November 2007: SEC eliminated the US GAAP reconciliation for foreign private issuers • Mid-2007, through 2008: SEC explored the use of IFRS by US companies The SEC issued a Concept Release seeking comment on the possible use of IFRS by US domestic registrants In November 2008 the SEC issued for comment an updated Roadmap that anticipated mandatory reporting under IFRS beginning in 2014, 2015 or 2016, depending on the size of the company US GAAP versus IFRS The basics 49 Appendix — The evolution of IFRS • February 2010: SEC reaffirmed its commitment to IFRS In February 2010, the SEC voted unanimously t o publish a statement reaffirming its c omm it m ent t o the goal of a single set of high-quality global accounting standards and expressing support f o r the continued convergence of US GAAP and IFRS The SEC said t hat after executing a Work Plan t o address certain questions, it would be able t o make an informed decision in 2011 about the furt he r incorporation of IFRS into the US financial reporting system IFRS resources • October 2010: SEC issued a Progress Report on its Work Plan • July 2011: SEC staff sponsored a roundtable to discuss benefits or challenges in potentially incorporating IFRS into the financial reporting system for US issuers The participants discussed investors’ understanding of IFRS, the impact on smaller public companies and on the benefits and challenges in potentially incorporating IFRS into the financial reporting system f or US issuers • May 2011: SEC staff published a paper detailing a possible approach for incorporating IFRS into the US financial • November 2011: SEC staff issued reporting system The SEC staff said the two papers as part of its Work Plan: approach could achieve the goal of a single An Analysis of IFRS in Practice and set of high-quality accounting standards and A Comparison of U S GAAP and IFRS could minimize the cost and eff ort needed The SEC staff papers provide additional t o incorporate IFRS into the US financial information f o r the SEC t o review before it reporting system makes its decision • Spring through fall 2011: Convergence schedule delayed The FASB and the IASB extend their timetables f o r completing their priority convergence projects beyond their target of June 2011 The Boards decided t o re-expose proposals on revenue recognition and leases, which will result in additional delays • July 2012: SEC staff issued its final progress report on its Work Plan for the Consideration of Incorporating International Financial Reporting Standards into the Financial Reporting System for U.S Issuers (The Final Report) The report summarized what the staff learned in carrying out the work plan The report does not include a recommendation t o the Commission about whet her or how t o incorporate IFRS into the US financial reporting system The report notes that the Commission still needs t o analyze and consider the threshold question — whether and, if so, how and when IFRS should be incorporated into the US financial reporting system As a result, we not expect a decision f r om the Commission before 2013 US GAAP versus IFRS The basics Appendix — The evolution o f IFRS 50 Ernst & Young offers a variety of online resources that provide m or e detail about IFRS as well as things t o consider as you research the potential impact of IFRS on your company www.ey.com/ifrs Ernst & Young’s global website contains a variety of free resources, including: • IFRS Outlook  — a bimonthly magazine wit h articles t hat address matters such as Ernst & Young’s views on activities of the IASB and IFRS Interpretations Committee, the political environment surrounding the current state of standard setting or the broader implications of IFRS AccountingLink AccountingLink, at ey.com/us/accountinglink, is a virtual newsstand of US technical accounting guidance and financial reporting thought leadership It is a fast and easy way t o get access t o the publications produced by Ernst & Young’s US Professional Practice Group as well as the latest guidance proposed by the standard setters AccountingLink is available free of charge • Other technical publications  —  including a variety of publications focused on specific standards and industries Global Accounting & Auditing Information Tool (GAAIT) GAAIT-Client Edition contains Ernst & Young’s comprehensive proprietary technical guidance, as well as all standard setter content GAAIT-Client Edition is available through a paid subscription • International GAAP® Illustrative Financial Statements   — a set of illustrative interim and annual financial statements that incorporates applicable presentation and disclosure requirements Also provided is a range of industry-specific illustrative financial statements International GAAP® Written by Ernst & Young and updated annually, this is a comprehensive guide t o interpreting and implementing IFRS and provides insights into how complex practical issues should be resolved in the real world of global financial reporting • IFRS Developments — announces significant decisions on technical topics that have a broad audience, application or appeal • From here you can also link t o several country-specific IFRS pages, including Canada and the United States, and locate information about free web-based IFRS training and our Thought center webcast series Please contact your local Ernst & Young representative for information about any of these resources US GAAP versus IFRS The basics 51 Ernst & Young Assurance | Tax | Transactions | Advisory About 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matters before making anydecision ED None ... guidance in ASC 810 requires the US GAAP versus IFRS The basics Consolidation, joint venture accounting and equity me thod investees/associates US GAAP Preparation o f consolidated financial statements... erm US GAAP versus IFRS The basics Consolidation, joint venture accounting and equity me thod investees/associates equity method investees/associates Similarities The principal guidance for consolidation... Prohibited US GAAP versus IFRS The basics Financial statement presentation US GAAP versus IFRS The basics Financial statement presentation Interim financial reporti ng The Boards have also delayed