® International Accounting Standards Committee Foundation December World Bank—Advanced Program in Accounting and Auditing Regulation IFRSs—an overview Tricia O’Malley IASB Board Member 6 December 2005 * The views expressed are those of the speaker, not the IASB

® December 2005World Bank—Advanced Program in Accounting and Auditing Regulation 2 Advisory Groups Standards Advisory Council IASC Foundation Structure International Accounting Standards Board Staff IFRIC (Interpretations) The standard setting operation

® December 2005World Bank—Advanced Program in Accounting and Auditing Regulation 3 IASC Foundation —Oversight 22 trustees:  6 from North America  6 from Europe  6 from Asia/Oceania  4 Any area Appoint members of IASB, SAC and IFRIC Monitor IASB’s performance, raise funds, approve budget, responsible for constitution

® December 2005World Bank—Advanced Program in Accounting and Auditing Regulation 4 Standards Advisory Council (SAC) 41 members—worldwide Meets 3 times a year Advises IASB on strategy/priorities Informs IASB of implications of major projects

® December 2005World Bank—Advanced Program in Accounting and Auditing Regulation 5 Board 12 full-time and 2 part-time members Sole responsibility for setting agenda and standards Presently from 9 countries and 5 continents

® December 2005World Bank—Advanced Program in Accounting and Auditing Regulation 6 International Financial Reporting Interpretations Committee (IFRIC) Chaired by Board member (non- voting) 12 volunteer voting members Interpretation and clarification of principles

® December 2005World Bank—Advanced Program in Accounting and Auditing Regulation 7 Staff The Board’s work is supported by: 25 technical staff 25 support and publications staff - from 12 countries

® December 2005World Bank—Advanced Program in Accounting and Auditing Regulation 8 IASB objective To develop a single set of high quality, understandable and enforceable global accounting standards that require high quality, transparent and comparable information To co-operate with national accounting standard setters to achieve convergence But, why?

® December 2005World Bank—Advanced Program in Accounting and Auditing Regulation 9 Outcomes sought Improved economic decision making  Better pricing of capital  More efficient allocation of resources Increased world-wide investment Reduced preparation costs Enhanced regulatory interface

® December 2005World Bank—Advanced Program in Accounting and Auditing Regulation 10 IASB’s a standard-setter not a regulator Standard setters  Determines appropriate financial reporting Regulators  Specify which regulations should be followed  Responsible for enforcement

® December 2005World Bank—Advanced Program in Accounting and Auditing Regulation 11 Principle 1: Independent standard setting Independent board members All board meetings in public Thorough due process Private funding No political influence

® December 2005World Bank—Advanced Program in Accounting and Auditing Regulation 12 Principle 2: Principle based standards PrinciplesRules

® December 2005World Bank—Advanced Program in Accounting and Auditing Regulation 13 Principle 3: Thorough due process Research National Standard Setter Discussion Paper Exposure Draft Standard Others Comment analysis 9-15 months Comment analysis Effective Date 6-18 months

® December 2005World Bank—Advanced Program in Accounting and Auditing Regulation 14 Tracking the process Website Meetings:  Observer notes  Web cast of IASB meeting  Decision summaries / Update Newsletter - Insight (quarterly)

® December 2005World Bank—Advanced Program in Accounting and Auditing Regulation 15 IASB priorities Promoting adoption of IFRSs Convergence Improving standards, filling gaps

® December 2005World Bank—Advanced Program in Accounting and Auditing Regulation 16 IASB prioritises by… Relevance & reliability Convergence Quality Resource constraints Existing guidance

® December 2005World Bank—Advanced Program in Accounting and Auditing Regulation 17 What is convergence? Old approach was ‘harmonisation’ Convergence differs:  Topic is addressed at the same time using the same due process  Objective is to reach one common high quality answer

® December 2005World Bank—Advanced Program in Accounting and Auditing Regulation 18 Convergence process National standard-setters work with the IASB  Multi-board teams developing projects  Converge standards to best international practice

® December 2005World Bank—Advanced Program in Accounting and Auditing Regulation 19 Convergence with FASB The work is focused upon: Short to medium term projects with quick implementation Projects with a medium or long term view and requiring substantial work SEC accept IFRS reporting without reconciliation 2007/09

® December 2005World Bank—Advanced Program in Accounting and Auditing Regulation 20 SEC roadmap  Application of IFRS  Investors gain knowledge  All share implementation experiences  Status of IFRS/GAAP convergence  SEC review additional filings  Evaluate significance of differences  Recommend elimination of reconciliation

® December 2005World Bank—Advanced Program in Accounting and Auditing Regulation 21 Active agenda projects Convergence FV Measurement Puttable Instruments Amendments to IFRS 2 Conceptual Framework Revenue Recognition Financial Instruments Business Combinations II Performance Reporting (A/B) Emission Rights Consolidation Insurance SMEs

® December 2005World Bank—Advanced Program in Accounting and Auditing Regulation 22 Research agenda – What the future holds Measurement objectives Extractive industries Financial instruments Hyperinflation Intangible assets Management commentary Investment entities Liabilities and equity Leases Joint ventures

® International Accounting Standards Committee Foundation December World Bank—Advanced Program in Accounting and Auditing Regulation Questions?