Jana Raedy
University of North Carolina
► Initial 14 members are appointed to the IASB - 2000.
► The IASB begins promulgating standards as IFRS from IAS. The SIC becomes the IFRIC-2002.
► The European Union endorses IFRS for 2005 adoption - 2002.
► Norwalk Agreement is executed between the IASB and FASB -2002.
► SEC published a roadmap (Roadmap) for elimination of a US GAAP reconciliation for FPIs 2005.
► The FASB and IASB published a Memorandum of Understanding, to set forth priorities in their
joint work program -2006.
1970s 1980s 1990s
► The IASC is
formed –
1973.
► IASC Advisory Council formed to
provide oversight of IASC 1994.
► Standards Interpretations
Committee (SIC) is formed 1997.
► IASC is restructured to form a
new board: the IASB – 1999.
2000s
► SEC eliminated the US GAAP
reconciliation for FPIs - 2007.
► SEC (under Chairman Cox) published
a proposed Roadmap for the
mandatory adoption of IFRS in the
US - 2008.
► FASB and IASB reaffirmed their
commitment to the MOU -2009.
► SEC established a Work Plan for its
2011 IFRS adoption decision -2011.
Courtesy of Ernst &Young Foundation
IFRS required or permitted
Local GAAP based on legacy IAS
No action taken/date set for adoption
In process of adopting or converting to IFRS
Courtesy of Ernst &Young Foundation

Currently FASB and IASB are working on many
convergence projects that are to be completed in
2011.
◦ Consolidation, Fair value measurement, Financial instruments,
Financial statement presentation (presentation of OCI), Leases,
Revenue recognition

SEC expected to come to some decision in 2011
◦ Based upon recent statements – my guess is not until the latter part of
the year

SEC will allow a minimum of four years to adjust
if it mandates the use of IFRS. This would mean
the use of IFRS in 2015 at the earliest.
►
►
►
►
Adoption: US would practice under IFRS as issued with no modifications.
Convergence: US would practice under US GAAP with efforts to converge
differences with IFRS standards over time.
Endorsement: US would review each IFRS standard as issued and
determines whether the standard should be endorsed for practice with
or without modification.
Condorsement (SEC currently discussing):
► US GAAP would continue to exist.
► The IASB and FASB would finish the major convergence projects in the MOU.
► The FASB would work on the following simultaneously:
► No new major projects but rather set priorities of converging US GAAP (remaining topics
not on the current agenda) to IFRS. This would be to make sure that these existing IFRS
standards are suitable for US capital markets.
► Consider new standards issued by the IASB for endorsement (but not required) or
incorporation (required) into US GAAP. This would ideally be issuing the standards in the
codification without modification. This would also assume the US involvement in IFRS
standard setting.
► This approach would allow the US to maintain control of US standards.

Big, big picture:
◦ Not very different. Principles are virtually identical.
 Conceptual Framework is one convergence project.

Big picture, by topic (typical intermediate
coverage):
◦ Some differences, but not insurmountable for the
classroom.

Detailed level (what might be encountered in
practice):
◦ Lots of differences.

YES! And we should be teaching it now.


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Foreign subs located in the US are on IFRS.
US multinationals have foreign subs on IFRS.
Foreign private issuers trading in the US are only required to
file IFRS reports.


Much more likely now that students will do global rotations
Competitive advantage for students


CPA Exam now covers IFRS (effective January 2011)
Recruiting firms are interested in students having IFRS
knowledge

To assess current curriculum
◦ Some topics no longer that important
(extraordinary
items)
◦ Some are infrequent in practice
(non-monetary exchanges of
assets, involuntary conversion of assets, sum-of-the-years-digits depreciation)
◦ Some are industry specific (depletion)
◦ Some aren’t allowed under typical circumstances
(revenue recognition - installment and cost recovery methods)
◦ Others need to be added
(revenue recognition – multiple
deliverable, tax provisions, revaluations)

To build other skills our students need
◦ Judgment/Decision Making Skills
 US GAAP relies extensively on judgment - IFRS even
more so
◦ Critical Thinking Skills
 ability to read and interpret authoritative accounting
literature
 ability to think about business problems
 ability to understand the reasons behind standards

Fully integrated or as a stand-alone course?
Full integration
Stand Alone
US GAAP knowledge
Don’t spend time
relearning US GAAP
Provides a good review
of US GAAP (use preclass homework)
Confusing?
Requires students to
sort out 2 sets of
standards while they
are still trying to learn
Can get US GAAP under
their belts before
attempting a “2nd
language”.
Faculty involvement
Involves more faculty
Minimizes number of
faculty involved

LESS RULES!

MORE emphasis on:
◦ Students don’t remember them anyway.
◦ We can’t even teach all of US GAAP rules now.
◦ Teaching students to find the authoritative literature and
interpret the standards for themselves.
 If we do this, then we don’t need to teach then every little
rule.
◦ Creating a classroom/curriculum that provides
opportunities for students to enhance their critical
thinking, decision-making and judgment skills.
 Research Cases
 Basis for Conclusions
 Debate Cases

My suggestions:
◦ Intro to IFRS (similar to what I’ve provided today)
◦ Discussion of principles vs. rules
◦ Discussion of the need for judgment and critical
thinking skills.
 Needed for US GAAP, even more so for IFRS
◦ Very basic coverage of differences between US
GAAP and IFRS. For example:
 Inventory – LIFO not allowed under IFRS
 LTOA – can be revalued under IFRS
 Hybrid securities – bifurcated under IFRS

Coming soon! 
◦ Gordon, Raedy and Sannella, Intermediate
Accounting
 Fully integrated textbook
 Focus on judgment and critical thinking skills without
sacrificing necessary rules
International Accounting Standards Board (IASB)
http://www.iasb.org
Securities and Exchange Commission (SEC)
http://www.sec.gov/spotlight/
globalaccountingstandards.shtml
Financial Accounting Standards Board (FASB)
http://www.fasb.org/intl/
International Association of Accounting
Education and Research (IAAER)
http://www.iaaer.org
American Institute of Certified Public Accountants
(AICPA)
http://www.ifrs.com/
American Accounting Association (AAA) –
look to International Accounting Section
http://aaahq.org
Access to eIFRS
part of Membership
*Individual ,
Student or
Institution
Deloitte
http://www.deloitte.com/view/en_US/us/Services/audit-enterprise-risk-services/FinancialAccounting-Reporting/IFRS/index.htm
E&Y
http://www.ey.com/US/en/About-us/Our-people/About-us-Our-people-Academic-ResourceCenter
http://www.ey.com/US/en/Services/Assurance/Accounting-and-Financial-Reporting/USGAAP_vs_IFRS_the-basics-March-2010_US-GAAP-and-IFRS-convergence
Grant Thornton
http://www.grantthornton.com/portal/site/gtcom/menuitem.91c078ed5c0ef4ca80cd8710033841ca/
?vgnextoid=bb444cfadd5d3110VgnVCM1000003a8314acRCRD
KPMG
http://www.kpmgifrsinstitute.com/
PwC
http://www.pwc.com/Extweb/service.nsf/docid/8E714A79E0DD6C9980256BBC00382351
IASPlus Home Page - News about International Financial Reporting
http://www.iasplus.com

For access to these materials contact
Catherine Banks
◦ Catherine.banks@ey.com
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What would you like to discuss?
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Thanks for your time!