Introducing the IASB

1
Introducing the IASB

• Objectives
• Structure
• Procedures

2
IASB A Refocused Objective

• Development of a single set of high quality,
  understandable and enforceable global accounting
  standards that require high quality, transparent
  and comparable information in financial
  statements
• Bringing about convergence of national accounting
  standards and International Accounting Standards

3
IASBs Organisation
Trustees (19)
Standards Advisory Council
Board (14)
Steering Committees Other Advisors
SIC
Staff
4
The IASB Members

• Sir David Tweedie Chair
• Liaison Responsibilities
• Australia/New Zealand, Canada, France, Germany,
  Japan, UK and USA
• Others
• Public practice (1) Preparers (2) Users (2)
  Academic (1)

5
Standards Advisory Council

• Appointed by the Trustees
• Broad-based constituents
• Advises the Board and/or the Trustees
• Appointments announced in June 2001

6
SAC - Distribution
7
IASB Interpretations

• Standing Interpretations Committee
• Appointed by the Trustees
• Reports to the Board
• IASB has requested that SIC review its role and
  make suggestions for improvements to mandate and
  operating procedures

8
IASB Due Process

• Board, SAC and SIC meet in public
• IASB will solicit comments via
• Discussion Documents
• Exposure Drafts
• Draft SIC Interpretations
• Public hearings

9
IASB Achieving Convergence

• IASB is to bring about convergence of national
  accounting standards and IAS
• Formal liaison with national standard setters
• Sharing technical staff and resources
• Coordinating agendas and due process
• Regular meetings between IASB and national chairs

10
IASB Fundamentals for Success

• IASB is a global standard setter
• Independent
• Partnership with national standard setters
• Not dominated by any regional or professional
  interest
• Accessible

11
IASB Work Programme 2001

• IASB Agenda likely to feature
• Improvements project
• Transition to IAS as a primary basis
• Fundamental projects
• Leadership projects
• Convergence projects

12
IASB Agenda Priority Projects

• Business combinations
• Financial instruments - derecognition
• Consolidation policy
• Insurance contracts
• Measurement and impairment
• Reporting income and expenses
• Share-based payment

13
Global Acceptance

• Basel Committee
• IOSCO
• European Commission
• U.S. Securities and Exchange Commission
• Canada

14
Basel Committee

• Supported IASC Standards
• Pledged to continue close dialogue
• Concerns with two standards
• IAS 30
• currently under revision
• IAS 39
• IAS 39 Implementation Guidance has helped

15
IOSCO

• Supported the use of IASC Standards as
  supplemented where necessary to address
  outstanding substantive issues at a national or
  regional level

16
IOSCO (ii)

• Supplemental Treatments
• Reconciliation
• Showing the effect of applying different
  accounting method, in contrast to that applied
  under IASC Standards
• Disclosure
• Additional disclosure - either in presentation or
  in the footnotes

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IOSCO (iii)

• Supplemental Treatments (continued)
• Interpretation
• IOSCO members may specify a particular
  alternative provided in an IASC Standard, or a
  particular interpretation where the IAS is silent
  or unclear
• Waivers
• Where a national or regional requirement
  conflicts with an IAS requirement, a waiver of
  that requirement may be granted

18
European Commission

• Regulation (February 2001)
• IAS required in consolidated financial statements
  of publicly-traded companies by 2005
• US GAAP will no longer be permitted
• Endorsement Mechanism
• Technical and political levels
• Will seek to be pro-active and work within IASBs
  due process

19
EU Endorsement Mechanism
20
EU Use of Fair Value

• EU Directives changed to permit use of fair value
  accounting for
• financial assets and
• derivative financial instruments generally
• Extends to banks and other financial institutions

21
U.S. SEC

• Concept Release (February 2000)
• Asked questions about IAS and international
  environment generally
• Are IAS
• Sufficiently comprehensive
• Of sufficient high quality
• Capable of rigorous application and
  interpretation
• Supporting reporting infrastructure

22
U.S. SEC (ii)

• Staff have concluded analysis of the comments
  received
• Opinion was heavily divided
• Non-US respondents favoured use of IASC Standards
  without reconciliation
• US respondents were generally opposed
• Next stage in rule-making has not been announced

23
U.S. SEC (iii)

• Current situation either
• Prepare full U.S. GAAP financial statements or
• Prepare full IAS financial statements and provide
  a reconciliation to U.S. GAAP

24
Canada

• Discussion Paper (March 2001)
• Should accounting standards other than Canadian
  GAAP (i.e., US GAAP or IAS) be permitted in
  Canada?
• Implementation issues
• Professional capacity, comparability, statutes

25
Enforcement

• IASB has no power to enforce compliance
• Auditing profession
• IFAC, IFAD, major international accounting firms
• Regulators and governments
• IOSCO (securities markets)
• Basel Committee (banks)
• EU
• Stock exchanges