International Financial Reporting Standards The views expressed in this presentation are those of the presenter, not necessarily those of the IFRS Foundation or the IASB IFRS Foundation IFRS Adoption and Implementation in the World and in Latin America Seminario IFRS Colombia November 2011 © 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. Amaro Gomes IASB member Jan Engstrom IASB member

Agenda Introduction Global convergence: Progress and challenges Implementing IFRS and IFRS for SMEs 2 IFRS South America Conference (Sao Paolo) October 2011

International Financial Reporting Standards Global convergence: Progress and challenges Jan Engstrom July 2011 Project update and the future work plan

4 The IFRS Objective IFRS to be : the single set of accounting standards used worldwide providing high-quality, transparent and comparable information For investors and other users of financial information © 2010 IASC Foundation. 30 Cannon Street | London EC4M 6XH | UK. 4

5 IFRS around the World today 120(+) countries permit or require use of IFRS 70 (+) countries use the IFRS for SME

© 2008 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. 6

7 Why IFRS? ?

8 Investors are acting on a global market !!

9 Why IFRS? National standards don’t work on a global market Cross boarder business is hindered by national standards

10 Benefits to Capital Markets! Credibility of local market to foreign investors More cross-border investment Efficient capital allocation Comparability across political boundaries Facilitates global education and training

11 Benefit to companies! Lower cost of capital Facilitates raising capital abroad Integrated IT systems “One set of books” + easier consolidation Better understanding of financial statements from business partners abroad

12 FASB/IASB Agreement Remove major differences Align Agendas (new joint standards where significant improvement required) Interpretation

13 IFRS – FASB Convergence Process © 2010 IASC Foundation. 30 Cannon Street | London EC4M 6XH | UK – 04 Reaction to investor desire for improved, global standards following Asian crisis and US financial scandals IASB is established; enters Norwalk Agreement with FASB 2005 – 07 Growing IFRS adoption by major economies; continued US support and recognition of IFRSs as being high-quality standards MoU accelerating convergence SEC removes reconciliation requirement Financial crisis; G20 pressure for convergence leading to adoption; focus on remaining major joint projects Updates to MoU with 2011 targets and SEC roadmap MoU timetable adjusted to ensure critical issues are completed. Further SEC update to roadmap Modified convergence strategy prioritizes major projects for completion

14 G20 Summit – 25 September 2009 Redouble efforts to: –achieve a single set of high quality, global accounting standards within the context of their independent standard setting process –complete convergence project by June IASB’s institutional framework should further enhance the involvement of various stakeholders. G20 acknowledge that there could be differences between capital requirements and accounting rules 14

15 MoU projects completed in 2011 Consolidations / Joint Ventures Pensions Fair Value Measurement

16 Challenges ahead Political turbulence Implementation issues Governance Funding Acceptance of an independent global standard setter and its work program

International Financial Reporting Standards Implementing IFRS and IFRS for SMEs Amaro Gomes July 2011 Project update and the future work plan

18 Implementing IFRS: Few current important debates 1. Transparency v Financial Stability 2. Ideology –Fair value v historical cost –IFRS v US GAAP –Performance presentation 3. IFRS – international or regional? 4. ADOPT don’t ADAPT 5. Principles v rules

19 Principle-based standards PrinciplesRules

20 A principle based standard No exceptions Core principles (objectives) No inconsistencies Tied to conceptual framework Judgement Minimum guidance

Implementing IFRS: Challenges  Commitment => Decision: leaders, law, regulation  Responsibility  Stakeholders involvement  Strategic planning: date for adoption  Opportunity (economic) : investors apetite, expansion (emergent markets), demand for investments (eg. infrastructure) © 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK.

Implementing IFRS: Challenges  Solid financial system  Structure and expansion of capital markets...  Coordination: standards setter, regulators, and supervisors (internal and regional)  Training  Educational programs © 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK.

Implementing IFRS: Challenges  Divergencies between local GAAP and IFRS: identify and reduce assymmetries  Consistent application of IFRS: principles- versus rules-based => professional judgment  Transition: systems, processes, professionals  Actively participate in developing IFRS  Tax neutrality (identified as key in many countries) © 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK.

24 Implementing the IFRS for SMEs Good Financial Reporting Made Simple. 230 pages (full IFRSs are 3,000+) Simplified IFRSs – built on an IFRS foundation Specific for SMEs –User needs for information about short-term cash flows, liquidity, and solvency –Costs and SME capabilities Copyright © 2011 IFRS Foundation | 30 Cannon Street | London EC4M 6XH UK |

25 Who is the Standard aimed at? Millions of companies (over 99%)! 52 largest stock exchanges have about 50,000 listed companies Europe: 28 million SMEs USA: 25 million UK: 5 million Chile: 1 million Brazil: 6 million Copyright © 2011 IFRS Foundation | 30 Cannon Street | London EC4M 6XH UK |

26 Jurisdiction plans for adoption Today (December 2011), to the best of our knowledge: –74 jurisdictions have either adopted the IFRS for SMEs or stated a plan to adopt it within the next three years –This includes in Latin America… Copyright © 2011 IFRS Foundation | 30 Cannon Street | London EC4M 6XH UK |

27 IFRS for SMES: Plans for adoption in Latin America South America: Argentina, Brazil, Chile, Guyana, Peru, Suriname, Venezuela Caribbean: Antigua & Barbuda, Aruba, Bermuda, Bahamas, Barbados, Cayman, Dominica, Dominican Republic, Guadeloupe, Jamaica, Montserrat, St Kitts- Nevis, St Lucia, Trinidad Central America: Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama Copyright © 2011 IFRS Foundation | 30 Cannon Street | London EC4M 6XH UK |

28 The future IFRS in +120 countries and US convergence programme 201? IFRS in +150 countries and US broadly converged VisionA single set of high quality global accounting standards

© 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK Thank you. Questions or comments? Expressions of individual views by members of the IASB and its staff are encouraged. The views expressed in this presentation are those of the presenter. Official positions of the IASB on accounting matters are determined only after extensive due process and deliberation.