May 21, 2008
Financial Executives International
Global Financial Reporting Convergence Conference
The World is Moving to IFRS: Are You?
Panel 1: Why, When, Should You Consider Moving to IFRS?
Discussion Questions Prepared by Panel
Reasons for Change
1.
Why is momentum building for U.S. companies to prepare their financial statements and
report their financial results using International Financial Reporting Standards ("IFRS")
rather than U.S. Generally Accepted Accounting Principles ("GAAP")?
2.
Is it inevitable that we move toward one single globally applicable set of accounting
standards? Why would that be better than allowing companies based in particular
countries (including the U.S.) to continue using their own "national" accounting
standards? Are significant economies of scale attainable?
Impact on Investors and Other Users
3.
Would moving to IFRS benefit investors and potential investors in U.S. companies?
What is the value proposition to the investor of the U.S. converting to IFRS? What
interest do you detect from the investor community in moving from GAAP to IFRS?
4.
Would moving to IFRS help investors, analysts and others more easily compare financial
reporting of U.S. companies and foreign companies operating in the same industry or
sector?
5.
Would reported earnings of U.S. companies differ significantly between GAAP and
IFRS? Why or why not? Would other key performance indicators (KPIs) significantly
change?
6.
Would moving from GAAP to IFRS help U.S. issuers better compete for investment
capital?
7.
Compared to the SEC’s previously eliminating the reconciliation requirement for foreign
private issuers, would moving to IFRS prompt more foreign companies to list their shares
for trading in U.S. capital markets rather than on oversees markets in, for example,
London?
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Impact on Companies
8.
Would moving to IFRS affect multinational companies more than companies primarily
operating in one country? Why or why not?
9.
What are some compelling reasons why companies need to prepare now for the
conversion to IFRS?
10.
What are the practical implications of implementing; the impact on organizations and
how to prepare? How would moving to IFRS affect U.S. companies besides in preparing
their financial statements? Would this change present any nonfinancial benefits? Major
challenges?
11.
How is IBM impacted by IFRS now and how does the company feel about potential
mandatory adoption?
Impact on Preparers
12.
What should preparers of financial statements now be doing to ready themselves and
their functions for adoption of IFRS in the U.S.? As a preparer, what do you see as some
of the major work efforts in your organizations in handling the move to IFRS?
13.
Would moving to “all-IFRS” within the next five years be largely cost-additive to a
preparer? If so, how might it compare to, say, the incremental costs imposed by Section
404 of the Sarbanes-Oxley Act? What concerns do constituents have about the costs of
converting to IFRS?
14.
How will IBM handle the perceived increased use of judgment under IFRS?
15.
Where IFRS does not provide specific answers, won't preparers of U.S. financial
statements inevitably default to U.S. GAAP? Would this be positive or negative? If
negative, what should be done to prevent it from happening?
16.
What if IFRS provides no counterpart to rules in GAAP to which rules outside financial
reporting are connected (example: LIFO)?
17.
How would the adoption of IFRS affect fair value accounting in the U.S.?
Impact on Auditors
18.
How would moving to IFRS affect the work of external auditors? What structural
changes (if any) will public accounting firms have to make so that auditors will be able to
render the judgments required of them under accounting standards based more on
principles than on rules?
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Implementation and Effective Date
19.
Since we are still fighting challenges of getting through the credit crisis, do you think the
move to IFRS at this time could put too much pressure on the system?
20.
Some activist investors are asking -- are we ready for IFRS? Many think it will be too
disruptive, too fast. Are we moving too fast?
21.
If IFRS replaces GAAP for U.S. companies, how should the change occur? Should the
SEC require U.S. companies to use IFRS or should the SEC give them the option of using
either GAAP or IFRS? If IFRS is required, how much advance notice should U.S.
companies be given? Should U.S. companies (or some subset of them) have an option of
using either GAAP or IFRS during some transitional period preceding a “date certain” for
mandatory application?
22.
Should the movement to IFRS be for public companies only, or should private companies
be required to move to it as well? Not-for-profit enterprises? Why or why not? If
private companies are required to use IFRS, should they be given more time than public
companies to convert?
23.
What are the Europeans thinking about our implementation of IFRS? Confident/not
confident we can handle it smoothly?
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