PricewaterhouseCoopers LLP  Saint Louis University Exploring IFRS* April 13, 2010 *connectedthinking

PricewaterhouseCoopers LLP Bo Butters Assurance Partner PricewaterhouseCoopers LLP

2 Agenda Background and current landscape Similarities and differences between IFRS and US GAAP Impact of IFRS IFRS Ready Q&A

PricewaterhouseCoopers LLP 3 Principles vs. Rules Fundamentally, the frameworks underlying IFRS and US GAAP are similar Principles vs. Rules  IFRS is more purely principles based  US GAAP is also principles based but has evolved to become more prescriptive and rules-based, addressing specific industries and types of transactions  IFRS—2,500 pages  US GAAP—25,000 pages

PricewaterhouseCoopers LLP 4 IFRS Background & Structure  Standard setter—International Accounting Standards Board (IASB) founded in 2001 and based in London  International Accounting Standards Committee (IASC) Foundation -Appoint IASB members -Exercise oversight -Raise funds -Similar to Financial Accounting Foundation (FAF)  Predecessor organization was International Accounting Standards Committee (IASC) founded in 1973

PricewaterhouseCoopers LLP 5 IASB structure IASC Foundation 22 trustees IFRS Advisory Council IFRS High quality, enforceable and global IASB 16 members IFRS Interpretations Committee 14 members Appoint Govern Fund Appoint Interpret Advise Create 1 Trustee 1 Member PwC Trustees Geographical break-down Europe6 North America6 Asia / Oceania6 Rest of the world4

PricewaterhouseCoopers LLP 6 The World is Adopting IFRS IFRS has increasingly become the global accounting language More than 100 countries now require or permit the use of IFRS. IFRS were adopted in the EU in 2005 More than 12,000 public and private companies around the world use IFRS as their primary reporting framework Many countries have converged their local standards to IFRS All major non-US capital markets are impacted

PricewaterhouseCoopers LLP IFRS Overview – A Global Revolution 7

PricewaterhouseCoopers LLP 8 Capital Market Implications Easier access to capital for global corporations Improved cross-border comparability Improved transparency for non-US companies Reduced cost of compliance Streamlined merger and acquisition activity More efficient allocation of global capital investment

PricewaterhouseCoopers LLP 9 Why IFRS in the US ? Globalization rules Complexity of current standards is taking a toll on domestic companies Convergence of the two dominant accounting frameworks is a tough proposition IFRS will create cost efficiencies for global companies

PricewaterhouseCoopers LLP 10 Proposed SEC Roadmap In November 2008, the SEC released a proposed Roadmap for potential use of IFRS by US Issuers that could have led to: (1)the use of IFRS by all US issuers beginning 2014, and (2)optional use of IFRS by certain qualifying domestic issuers as early as 2009.

PricewaterhouseCoopers LLP 11 Proposed SEC Roadmap (cont’d) In February 2010, the SEC released Commission Statement in Support of Convergence and Global Accounting Standards Provided an update regarding the SEC’s consideration of global accounting standards and its continued support for convergence of US GAAP and IFRS Includes details of a Work Plan to be executed by the SEC staff to enhance the Commission’s analysis of the implications of a change to IFRS The Work Plan identified six areas of consideration in determining both whether and how to incorporate IFRS into the financial reporting system for U.S. issuers SEC plans to be in a position to make a determination about the use of IFRS in 2011 after execution of the Work Plan and completion of the convergence projects of the FASB and IASB

PricewaterhouseCoopers LLP 12 Proposed SEC Roadmap (cont’d) The six key areas of the Work Plan include: Sufficient development and application of IFRS for the U.S. domestic reporting system The independence of standard setting for the benefit of investors Investor understanding and education regarding IFRS Examination of the U.S. regulatory environment that would be affected by a change in accounting standards The impact on issuers, both large and small, including changes to accounting systems, changes to contractual arrangements, corporate governance considerations and accounting for litigation contingencies Human capital readiness

PricewaterhouseCoopers LLP 13 Proposed SEC Roadmap (cont’d) Reassessment in 2011 Consistent with the timeline in the original proposed Roadmap, the SEC expects to make a determination about whether to further incorporate IFRS into the financial reporting system for U.S. issuers in Potential mandatory adoption beginning in 2015 or 2016.

PricewaterhouseCoopers LLP Proposed SEC Roadmap (cont’d) #-Staggered adoption possible based on earliest adoption in 2015 or Assuming that the SEC determines in 2011 to incorporate IFRS into the US domestic reporting system, a possible timeline may unfold as follows:

PricewaterhouseCoopers LLP 15 Clear signals from the SEC: Committed to lead US capital markets through encouragement and clear direction on the use of IFRS by US companies Public statements - Mindful not to carry over US GAAP concepts and practices Challenges exist: SEC Commissioner Mary Schapiro Tax conformity and the LIFO issue Due process to enact IFRS standards – SEC influence Concessions on years presented in year of change Global regulatory oversight in the IFRS world Challenges the SEC faces in adopting IFRS in the US

PricewaterhouseCoopers LLP How big are the differences?

PricewaterhouseCoopers LLP 17 Inventory

PricewaterhouseCoopers LLP 18 The Concept of Inventory IFRS and US GAAP contain similar definitions of inventory: Assets which (1) are held for sale in the ordinary course of business (2) are in the process of production for such sale or (3) in the form of materials or supplies to be consumed in the production process or in the rendering of services. Inventories owned by manufacturing companies include: Raw materials (RM) Work in progress (WIP) Finished goods (FG)

PricewaterhouseCoopers LLP 19 Under IFRS, which inventory costing methodology is not allowed? A. Last-in, First-out (LIFO) B. Weighted-average cost C. First-in, First-out (FIFO) D. All are allowable methods How Well Do You Know?

PricewaterhouseCoopers LLP 20 Inventory Cost Formulas Under IFRS, entities are permitted to use one of the following cost methodologies: First-in, First-out (FIFO) Weighted-average cost Under US GAAP, entities are permitted to use the following cost methodologies: First-in, First-out (FIFO) Weighted-average cost Last-in, First-out (LIFO)

PricewaterhouseCoopers LLP Impact of IFRS

PricewaterhouseCoopers LLP 22 Moving to IFRS – Universities Considerations and challenges faced by universities National Association of State Boards of Accountancy (February ) -Maintain FASB as sole standard setter for US financial reporting -Focus on convergence with IFRS rather than adoption Sufficient, trained resources – faculty and materials Forced choice between IFRS and US GAAP for students Change management

PricewaterhouseCoopers LLP 23 Moving to IFRS – Students Considerations and challenges faced by students National Association of State Boards of Accountancy (February ) -Maintain FASB as sole standard setter for US financial reporting -Focus on convergence with IFRS rather than adoption Forced choice between IFRS and US GAAP Expectations of US GAAP and IFRS knowledge: Additional experience and requirements for interviewing – dependent on type of organization or firm

PricewaterhouseCoopers LLP 24 Moving to IFRS – Accounting Firms Considerations and challenges faced by accounting firms Documentation and support of judgment within a “principles”-based framework Sufficient, trained resources - Large international firms - Medium and small-size firms Change management

PricewaterhouseCoopers LLP 25 Moving to IFRS – Companies Considerations and challenges faced by companies converting to IFRS: Application of judgment within a “principles”-based framework Policy-setting and control challenges due to fewer “rules” in IFRS Adopters finding many more differences than expected Data gaps resulting from increased disclosures Systems capabilities U.S. GAAP deficiencies (i.e., conversion to IFRS uncovering challenges with historical U.S. GAAP accounting) Sufficient, trained resources Change management Communication of needs to operations/business development organizations

PricewaterhouseCoopers LLP 26 Preparing now means reaping the benefits later You Understand what IFRS means and when it might impact you Take advantage of every opportunity to learn about IFRS Be open to change PwC Enhance expertise in IFRS Provide thought leadership for key stakeholders Educate partners and staff on IFRS applications

PricewaterhouseCoopers LLP 27 What do you think? What are you going to do in regards to understanding IFRS and its impact?

PricewaterhouseCoopers LLP IFRS Ready

PricewaterhouseCoopers LLP 29 Expectations of new hires Learning opportunities – -See What’s On, Channel 3 – Learning Annex – IFRS Ready -Videos and illustrative IFRS financial statements -Webcasts on technical topics IFRS Ready

PricewaterhouseCoopers LLP 30 Sophomores Seeking summer programs or internships With at least 1 term of accounting  Pre-awareness Juniors + Seeking internships or full-time positions  Awareness One Year Vision

PricewaterhouseCoopers LLP 31 Pre-Awareness Define what IFRS stands for Articulate the general uses of IFRS and U.S. GAAP Recognize that IFRS will be important in the future Awareness Articulate the sources of U.S. GAAP and IFRS Describe IFRS Financial Statements Identify a difference between IFRS and U.S. GAAP Explain status and timetable for adoption Learning Goals

PricewaterhouseCoopers LLP 32 Interactive Financial Statements Learning Goals: Describe an example of IFRS Financial Statements Identify an example of a difference between U.S. GAAP and IFRS

PricewaterhouseCoopers LLP 33 Interactive IFRS Financial Statements

PricewaterhouseCoopers LLP © 2008 PricewaterhouseCoopers LLP. All rights reserved. “PricewaterhouseCoopers” refers to the PricewaterhouseCoopers LLP (a Delaware limited liability partnership) or, as the context requires, other member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity. This proposal is protected under the copyright laws of the United States and other countries as an unpublished work. This proposal contains information that is proprietary and confidential to PricewaterhouseCoopers LLP, and shall not be disclosed outside the recipient's company or duplicated, used or disclosed in whole or in part by the recipient for any purpose other than to evaluate this proposal. Any other use or disclosure in whole or in part of this information without the express written permission of PricewaterhouseCoopers LLP is prohibited. 