IFRS Foundation tracks global adoption of IFRS...... "It is - TopicsExpress



          

IFRS Foundation tracks global adoption of IFRS...... "It is unclear when or whether a decision to move to IFRS will be made. Although a mandatory (or voluntary) change to IFRS for US public companies is no longer in the foreseeable future, the need for US preparers and investors to be ‘financially bilingual’ is now a reality" The IFRS Foundation makes progress charting the global adoption of IFRS with the publication of IFRS profiles for all G20 jurisdictions. The IFRS foundation published initial findings from its project to assess the global adoption of IFRS. Following the release, Hans Hoogervorst, Chairman of the IASB, addressed the question ‘are we there yet?’¹ He called the results ‘both fascinating and very encouraging’ but acknowledged there is more to do. This includes getting the remaining large economies on board and keeping the focus on consistent application by those who have adopted. The facts The IFRS Foundation surveyed 66 jurisdictions (including all of the G2o) about IFRS adoption. This was the first phase of a larger project to assess global adoption of IFRS. The results were described by Michel Prada, Chairman of the IFRS Foundation Trustees, as illustrating ‘remarkable progress’. You can make your own judgment based on the facts below. Extract from ‘IFRS Foundation chart progress towards global adoption of IFRS’ 5 June 2013 Of the 66 jurisdictions that responded to the survey: • 95 per cent have made public commitments supporting IFRSs as the single set of financial reporting standards suitable for global application. • 80 per cent have already adopted IFRSs as a requirement for all or nearly all companies whose securities are publicly traded, while most of the remaining jurisdictions have made significant progress toward use of IFRSs. • Jurisdictions that have adopted IFRS have made very few modifications to IFRSs, while the few that were made are generally regarded as temporary steps in the jurisdiction’s plans to adopt IFRSs. Furthermore, in almost all cases, the IASB has active projects on its agenda that will result in an updated version of the Standard to which the jurisdiction has made modifications. • More than half of jurisdictions have either already adopted the IFRS for SMEs or are planning to do so in the near future. Consistency and the IASB’s role Consistency continues to be one of the primary concerns about a single set of global standards. The IASB argued that it is not their job to manage uniform application of IFRS. They do, however, acknowledge their contribution to the effort and continue to progress the initiatives on how the IASB might contribute to consistency, as outlined by Hans earlier this year.² • Principle-based standards – Standards that can be applied, audited and enforced consistently require engagement with regulators and local standard setters. The formation of the Accounting Standards Advisory Forum in April is a step in the right direction. •Post-implementation reviews – The IASB published a feedback statement on the IFRS 8 review in July. The IFRS 3 review is ongoing. See page 5. • IFRS Interpretations Committee (IC) – The IFRS foundation has completed a two-year review of the IC. The revised responsibilities should give the IC the tools it needs to address diversity in practice and be more responsive. • More educational materials – The IASB continues to explore this as a potential solution to practice issues. IFRS 13 education material was released in December 2012. Guidance on materiality was proposed following the Discussion Forum on disclosures. Adoption in the United States The adoption of IFRS in the US continues to be the ‘elephant in the room’. The last official word from the SEC was in 2012. It is unclear when or whether a decision to move to IFRS will be made. Although a mandatory (or voluntary) change to IFRS for US public companies is no longer in the foreseeable future, the need for US preparers and investors to be ‘financially bilingual’ is now a reality. US investors continue to look overseas for investment. Recent estimates suggest that over $6 trillion of US capital is invested in foreign securities. The US markets also remain open to non-US companies that use IFRS. There are currently over 450 non-US filers with market capitalisation in the multiple of trillions of US dollars who use IFRS without reconciliation to US GAAP. Preparers need to use IFRS, for example, for cross-border, merger-and-acquisition, and capital-raising activities. There is no doubt that rest of the world will continue to watch the US but IFRS is gaining momentum in other large countries. For example, the Financial Service Authority in Japan is working on increasing the number of listed companies using IFRS in the next few years. What is next? The IFRS foundation has only taken the first step in its assessment of the global adoption to IFRS. The project being led by Paul Pacter, former Board member, is in the early stages. Eventually, the IFRS foundation hopes to have a profile for every jurisdiction that has adopted IFRSs, or is on a programme toward adoption of IFRSs.
Posted on: Sat, 05 Oct 2013 04:44:22 +0000

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