1. International Accounting Standards Board ® Convergence of Accounting Standards and the IASB Process Gilbert Gelard, Member of IASB Bucharest, May 2003

2. ® International Accounting Standards Board Harmonisation?No Harmonisation?No Convergence?Yes Convergence?Yes

3. ® International Accounting Standards Board Harmonisation European Directives of the 1970’s aimed at harmonisation Did not succeed Hence, choice of a single set of standards for Europe (2002 – 2005) to ensure a level playing field for listed companies

4. ® International Accounting Standards Board Why harmonisation failed A bottom-up approach A bottom-up approach No conceptual basis No conceptual basis No real desire to move from one’s habits No real desire to move from one’s habits Too much linkage with taxation and law Too much linkage with taxation and law Little progress, uneven playing field

5. ® International Accounting Standards Board Convergence Aim: Aim:One single set of standards Means: Partnership between IASB and (key) National Standard Setters through: Joint projects Monitoring Enhancement of communication

6. ® International Accounting Standards Board Requirement for convergence of accounting standards Sharing a common conceptual framework Sharing a common conceptual framework Working under effective partnership(s) Working under effective partnership(s) Choosing the best alternative, whatever its origin is Choosing the best alternative, whatever its origin is Mechanism for consistent interpretations Mechanism for consistent interpretations Consistent accounting standards

7. ® International Accounting Standards Board Requirement for consistency and convergence in practice Having compulsory consistent accounting standards and Having compulsory consistent accounting standards and A strong enforcement, including strong A strong enforcement, including strong Regulation (law, market, regulation) Auditing (competence, independence, oversight) Governance Standards can achieve nothing by themselves. Enforcement is the key

8. International Accounting Standards Board ® IASC Foundation & International Accounting Standards Board The Organisation

9. ® International Accounting Standards Board IASB 12 Full time 2 Part time Advisory Groups 21 Tech.Staff IFRIC Interpretations Committee Standards Advisory Council IASC Foundation (19 Trustees) IASC Foundation Structure

10. ® International Accounting Standards Board IASC Foundation Trustees Auditors5Asia/Pacific4 Analysts1Europe6 Preparers1 North America 6 Academics1Other3 At Large 11 1919

11. ® International Accounting Standards Board IASB Composition Australia/ NZ* 1Auditors5 Canada*1Preparers3 France*1Analysts/Users3 Germany*1Academic1 Japan*1Others2 South Africa 114 Switzerland1 * National standard- setter liaison United Kingdom* 2 United States* 5 14

12. ® International Accounting Standards Board Logistics Monthly IASB meetings Monthly IASB meetings Regular meetings with 8 liaison standard setters Regular meetings with 8 liaison standard setters SAC meetings: 3 times per year SAC meetings: 3 times per year IFRIC meetings: 6 times per year IFRIC meetings: 6 times per year

13. ® International Accounting Standards Board Liaison Standard- setters FASB FASB UK UK Canada Canada France France Australia Germany NZ Japan

14. ® International Accounting Standards Board Partnering Arrangements Bi-lateral between IASB and 1 of liaison standard-setters Bi-lateral between IASB and 1 of liaison standard-setters Lead, support and monitoring roles Lead, support and monitoring roles Commitment to accept outputs Commitment to accept outputs

15. ® International Accounting Standards Board Process Full due processes, as applied by national standard-setters Full due processes, as applied by national standard-setters Partnering arrangements with liaison standard-setters Partnering arrangements with liaison standard-setters

16. ® International Accounting Standards Board IASB outputs for the first two years up to May 2003 Exposure Drafts  Improvements to twelve standards  Amendments to IAS32 – IAS39  First time adoption ED1  Share based payments ED2  Business Combinations* ED3 *with consequential amendments to Impairment and to Intangible Assets

17. ® International Accounting Standards Board IASB Expected out put up to March 2004* Standards* IFRS 1: First time adoption IFRS 1: First time adoption Business combinations I Business combinations I Share based payments Share based payments Insurance contracts (phase I) Insurance contracts (phase I) Improvements to twelve standards Improvements to twelve standards Amendments to IAS32 – IAS39 Amendments to IAS32 – IAS39 Exposure Drafts Performance reporting Performance reporting Business combinations II Business combinations II Deposit taking, lending and securities activities Deposit taking, lending and securities activities With a view to implementation in Europe as of January 2005 With a view to implementation in Europe as of January 2005

18. ® International Accounting Standards Board SME’s and Emerging Markets  Option to member states to extend IFRS’s beyond the consolidated accounts of limited companies  The IASB has recently formed a group to deal with the very difficult issue of SME’s. Very preliminary stage