jan engstrom

International Financial Reporting Standards

The views expressed in this presentation are those of the presenter, not necessarily those of the IASC Foundation or the IASB

The Enduring Need for Strong International

StandardsJan Engstrom

Sao Paulo

September 2009

2The Vision

…one single set of high

quality global standards..

..used on the global

capital markets.

3Benefits to Capital Markets

• Credibility to foreign investors

• More cross-border investment

• Efficient capital allocation

• Facilitates global education and training

… and benefits to companies

4IASB structure 4

StandardsAdvisoryCouncil

Operations

International Accounting Standards

Board IFRIC

Staff: technical 50 + admin 30WorkingGroups

PublicationsXBRLEducation

International Accounting Standards Committee Foundation Trustees

International Monitoring

Board

6

The world’s stock markets (US$ trillion)

0

10

20

30

40

50

60

70

2005 2006 2007 2008 2009

8The Financial Crises

• Financial Stability Board

– Reasons leading to the crises

– Actions needed

• G20

– Basically same conclusions

• Politician’s and regulator’s supervision failed

– Bonus systems

– Risk acceptance

– Decapitalising

9The Financial Crises – IASB actions

• Guidance – Fair values in illiquid markets

• Financial Crises Advisory Group

• Reclassification of financial instruments

• ED consolidations / ED derecognition

• FASB changed impairment rules

• G20 November 08 / April 09

• Replacement of financial instruments standard (#39)

10

Replacement financial instruments standard (#39) - timetable

2008 IASC Foundation | 30 Cannon Street | London EC4M 6XH | UK | www.iasb.org

10

Project phase Exposure Draft Finalisation

1. Classification and measurement

July 2009 In time for 2009 year end financial statements

2. Impairment methodology

October 2009 In 2010

3. Hedge accounting

December 2009 In 2010

* The above is in addition to a project on derecognition of financial instruments. ED Derecognition was published in March 2009.

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2009 IASC Foundation | 30 Cannon Street | London EC4M 6XH | UK | www.iasb.org

11Overview of model

Fair Value(= no impairment)

Amortised cost(one impairment

method)Managed on a contractual yield

basis

Basic loan features

+FVO for

accounting mismatch (option)

All other instruments:• Equities• Derivatives• Some hybrid contracts

Equities: OCI

presentation available(option)

12IASB Focus today

• The Financial Crises

• 2011

• SME

• Translations

• Constitutional review

• Agenda 2012 and forward

13Due process

Research

National

Standard

Setters

Discussion

Paper

Exposure

DraftStandard

Others

Comment

analysis

Comment

analysisEffective

Date

and

local

approval

process!

14Principle-based standards

PrinciplesPrinciples RulesRules

15A principle based standard

• No exceptions or inconsistencies

• Core principles

• Tied to conceptual framework

• Judgement

• Minimum guidance

• Few interpretation

16The Agenda

• Conceptual framework

• Revenue recognition

• Financial Statement Presentation

• Liabilities

• Insurance

• Fair value measurement

• Common control

• Emission rights trading

• Leasing

• Pensions

• Consolidations

• Management Commentary

• Small and Medium sized entities

• Financial instruments

• Short term converg.x 4

17The Agenda – together with FASB

• Conceptual framework

• Revenue recognition

• Financial Statement Presentation

• Liabilities

• Insurance

• Fair value measurement

• Common control

• Emission rights trading

• Leasing

• Pensions

• Consolidations

• Management Commentary

• Small and Medium sized entities

• Financial instruments

• Short term converg.x 4

18After approval of standard

• >1 year after publication before implementation

• Review 2 years after implementation

19Roadmap: “MOU 2006”

1. Short term

- remove major differences

2. Medium term

- new joint standards where significant improvement required

20US SEC

Changes:

- Regulation: removal of reconciliation 2007

- Concepts Release: IFRS available to US companies?

23Translations

• The IFRSs are translated to 50 languages

• One translation per language

• Now a special focus on Spanish:– Improved availability – All IASB’s documents (=DP, ED, IFRS, IFRIC)– An enlarged translation committee

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© 2008 IASC Foundation. First Floor | 30 Cannon Street | London EC4M 6XH | UK. www.iasb.org

• A codification used to electronically exchange financial information between businesses and users

• The IASC Foundation develops the IFRS Taxonomy (also for SMEs) which is the XBRL

representation of the IFRSs

26IFRS for SMEs

• < 50,000 listed companies in the world

• Millions of SMEs– Suppliers, distributors, customers, ..

2727The Final IFRS for SMEs

Good Financial Reporting Made Simple.

• 230 pages• Simplified IFRSs - built on an IFRS

foundation• Suitable for entities that are not listed

and not financial institutions• Standalone product that sits side-by-side

with the full set of IFRSs

28Two general problems for IASB

• Principles v rules

• Acceptance of Standards

– EU?!

– SEC!

– Japan?

– Others??

jan engstrom

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