1. IFRS: A user perspective VIII Annual CPC Seminar , Sao Paulo
Stephen Cooper, Member IASB

2. IFRS Objective
The IFRS Foundation and the IASB are dedicated to developing and sustaining a single set of globally accepted accounting standards:
Aimed at providing high-quality, transparent, and comparable information for investors and other users of financial information
Providing the world’s integrated capital markets with a common language for financial reporting
Promoting capital market stability through the transparency and integrity of financial reporting
Taking appropriate steps with regulators and standard-setters to help promote consistent application of standards

3. Why Global Standards are Needed
Accounting standards evolved nationally because companies borrowed and investors invested only in their home country
Globalisation is inconsistent with multiple, national or regional accounting languages that hinder comparability
Corporations must consolidate global network of operations
Investors seeking diversification and return increasingly invest outside domestic markets

4. Global Standards: Benefits to Investors
Transparent financial markets and free trade require a high-quality, single, global accounting language
Credibility of local market to foreign investors
Greater cross-border investment
Efficient capital allocation
Comparability across political boundaries
Facilitates global education and training

5. Global Standards: Benefits to Companies
In the long run, global standard benefit companies – especially multi-nationals
Lower cost of capital
Integrated IT systems
Easier consolidation
One set of books
Assist in raising capital overseas
Understand financial statements of overseas suppliers, customers, subsidiaries

6. A Decade of Progress Pre 2001
Multi-GAAP world, no major economies using international stds.
2001
IASB is established under Foundation Chair Paul Volcker
2002
Europe leads first wave of jurisdictions to adopt IFRS while convergence process with FASB begins
2003
IASB issues 1st new standard
2005
Over 7000 public companies in 25 European countries switch to IFRS
2006
FASB and IASB establish a “roadmap” to substantially converge IFRS and US GAAP (MoU)
2007
Brazil, Canada, and Korea lead second wave of IFRS adoption
Trustees and IASB prioritise response to global financial crisis; G20 repeatedly calls for rapid move towards global standards
2011
On-going work on convergence programme and target date for SEC decision

7. Status of Global Standard Use
April 2010
Status of Global Standard Use 7
Since 2001: Companies in over 100 countries are now required or permitted to use IFRSs:
91 countries require IFRSs (for all domestic companies)
26 countries permit IFRSs
6 countries require IFRSs (for some domestic companies)
123 Total
Recent new joiners: Argentina, Brazil, Canada, Korea, Mexico
Japan: IFRS permitted for international companies; decision on mandatory adoption; target implementation pushed by 5-7yrs.
2011: Ninth year of convergence work with FASB resulting in significant new high quality standards 7

8. Royal Scots Club October 2011
The World is Getting Smaller 8 DT
Source of information (adapted from): 8

9. Why Global Standards: Non-US Markets Have Grown
32%

10. Factors Behind Success
Organizational governance and structure supporting high quality standards
High quality standards: Internationally, users recognize IFRS as high quality – supported by academic research1
Independent board: A transparent and independent standard setting process assures quality is maintained
Internationally accepted: EU decision to adopt IFRSs served as catalyst for broad adoption across Asia, Oceania, Africa, Americas
Convergence with the US: Close cooperation with FASB has led to higher-quality standards and a significant reduction in differences between the two sets of standards
1. “A Perspective on the SEC's Proposal to Accept Financial Statements Prepared in Accordance with International Financial Reporting Standards (IFRS) without Reconciliation to U.S. GAAP” by American Accounting Association's Financial Accounting Standards Committee, Karim Jamal (principal author), et al.

11. Corporate Governance – Three Tier Model11
U.S. Model
Global Model
Securities and Exchange
Commission (SEC)
Monitoring Board
(inc. SEC Chair)
Public accountability
to securities regulators
FAF Trustees
IFRS Foundation
Trustees (5/22 US)
Overseen
by Trustees
Financial Accounting
Standards Board
Independent
standard-setter
International Accounting
Standards Board
(4/15 US)
Independent and publically accountable

12. Key Challenges Ahead
The ultimate goal of global standards is still not fully achieved and there are challenges ahead…
Pending decisions on IFRS adoption for major economies like Japan, China, India, and the US
Consistency and high-quality implementation of IFRSs across jurisdictions
On-going need to always evaluate, enhance and then implement improvements to IFRS organization and process

13. IFRS – FASB Convergence Process
2001 – 04
SEC reaction to US investor desire for improved, global standards following EM crisis and US financial scandals
IASB is established; IASB-FASB reach Norwalk Agreement on convergence
2005 – 07
Growing IFRS adoption by major economies; concern over US loss of IPOs; desire to cement IFRS
MoU accelerates convergence, sets targets and removes requirement for FPI’s to reconcile with GAAP
Financial crisis; G20 consensus on convergence and adoption; focus on remaining major joint projects
Updates to MoU with 2011 targets and SEC roadmap
Stakeholder concerns for high quality standards vs convergence timetable
Modified convergence strategy prioritizes joint projects for 2011 SEC decision
Convergence is not the end point

14. Convergence: Accomplished to Date ...14
Inventory accounting
Accounting changes
Business combinations
Non controlling interests
Share-based payments
Segment reporting
Borrowing costs
Conceptual Framework – objective and qualitative characteristics
Joint ventures

15. Convergence: The Major Projects
Toronto November 2010
Convergence: The Major Projects 15
Crisis (MoU)
Financial Instruments
Fair value measurement
Consolidation
Derecognition
Other (Non MoU)
Insurance contracts
Other (MoU)
Revenue Recognition
Leases
Post-retirement benefits
Financial statement presentation
Liability / Equity
Four remaining projects will be finished with FASB to the highest possible standard

16. 2011 Decision on US Adoption is Next Step
SEC Staff Paper released in May details a formal path to US adoption through an incorporation mechanism
US companies can minimize implementation costs using phased approach
FASB stops writing new standards - preventing divergence
Existing, converged standards are incorporated into GAAP
IASB active projects will be completed, then incorporated
FASB incorporates remaining, non-converged standards over 5-7yrs
FASB remains the US national standard setter with responsibility of endorsing new standards as they are issued
Early adoption for large US companies is an open question
“Incorporation of IFRSs into national GAAP” is the path used by virtually all other countries

17. Future Agenda Issues Old Standards Agriculture Share-based payments
Toronto November 2010
Future Agenda Issues 17
Old Standards
Agriculture
Share-based payments
Income taxes
Pensions
Associates
Post-implementation review
Segments
Business combinations
Government grants
Intangibles
Foreign currency translation
Performance reporting
Disclosure framework
Other
Extractive activities
Common control

18. Principle-Based Standards
Toronto November 2010
Principle-Based Standards 18
No exceptions
Core principles (objectives)
No inconsistencies
Tied to conceptual framework
Judgement
Minimum guidance DT
Principles
Rules

19. Investor input is key IFRS focus on needs of investors and other users19
IFRS focus on needs of investors and other users
Significant effort in outreach to investors
Regional and global groups: CFA, CRUF, etc
Organisations: Fund managers, Rating agencies, etc
Individuals: Analysts, PMs, etc
IASB investor liaison – Hilary Eastman

20. Goal of Global Accounting Language is Close
IASB dedicated to developing and sustaining high quality, globally accepted standards –
Existing projects will be finished with FASB to the highest possible standard
Consultation and transparency are critical to setting new agenda
IASB and IFRS Foundation accept and are prepared for the responsibility of being the global standard setter

21. Questions or comments? 21
Expressions of individual views by members of the IASB are encouraged. The views expressed in this presentation are those of the presenters. Official positions of the IASB on accounting matters are determined only after extensive due process and deliberation.