代写 IFRS versus ASPE financial reporting

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    • †代写 IFRS versus ASPE  financial reporting    
    †Learning Objectives
    LO1  Describe the conceptual framework for
      financial reporting.

    LO2  Identify factors that can influence a country’s
      accounting standards.

    LO3  Identify the role that the IASB intends to play in
      the establishment of uniform worldwide accounting
      standards.

    LO4  Identify the direction that the FASB intends to
      follow for public companies.


    †Learning Objectives

    LO5  Describe how accounting standards in Canada
      are tailored to different types of organizations.

    LO6  Analyze and interpret financial statements to
      assess the impact of different accounting
      methods on key financial statement ratios.

    LO7  Identify some of the differences between
      IFRS and ASPE.
    †
    The Conceptual Framework
    for Financial Reporting        
    †Document in the CICA Handbook just prior to the
      IFRS’s in Part 1.
    †Main items include
    •The objective of general-purpose financial reporting
    •Qualitative characteristics of useful financial
       information
    •Underlying assumptions
    •Definition, recognition, and measurement of the
      elements of financial statements
    †All accounting practices should be traceable back to
      and supported by the conceptual framework.




    †The Conceptual Framework
    for Financial Reporting        
    †
    †Professional judgement is required in order to apply
    the basic principles and concepts of The Conceptual
    Framework in order to provide useful information
    to make decisions.

    †Use judgement to provide a fair representation of the
      financial position and the financial performance of
      the entity.

     
    †The Conceptual Framework
    for Financial Reporting        
    †There are three main areas where judgement needs
      to be applied:

    •Choice of appropriate accounting policies
    •
    •Making accounting estimates eg. tangible asset
      life, effective hedging strategy, asset impairment

    •Disclosure in the notes to the financial statements
      (what to disclose, disclosure details – how much
      disclosure.)
    †GAAP Variations and             
    Standardization                      
    †Past GAAP variations between countries caused
      financial measurement and presentation differences

    †GAAP differences have included income –
      smoothing techniques, variances in asset
      measurement and revaluations, and the differing
      nature and extent of disclosures.

    †Globalization of commerce and capital has increased
      the number of multinational companies and therefore
      the need to standardize financial reporting.


    †Comparability and cost-benefit
    constraint                               
    †The comparability objective of financial reporting is impaired by
       differing standards.
    †For example, to improve comparability to U.S. public companies,
      the U.S. Securities and Exchange Commission (SEC) has required
       Foreign companies that trade on U.S. exchanges to reconcile their
       net income from foreign GAAP to U.S. GAAP unless they use
      International Financial Reporting Standards   (IFRS’s) issued by
       the International Accounting Standards Board (IASB).
    †Prior to Canada adopting IFRSs in 2011, this applied to Canadian
      companies listed on U.S. stock exchanges
    †The cost of preparing financial statements under multiple GAAP
      standards is significant and hinders the international flow of capital.
    †The pressure toward accounting harmonization and convergence
      is a logical conclusion.
    †Factors that Influence a            
    Country’s Accounting Standards
    †The following factors can affect national accounting standards:
    •Taxation:  how closely is taxable income based on
      accounting income.
    §Capital markets:  in countries where publicly traded debt
      and equity are the major source of business financing,
      disclosure standards are greater.
    §Legal system:  Code law countries set GAAP in legal
      statutes; private bodies (e.g. CICA or FASB) set GAAP
      in common law countries.
    §Ties between countries:  GAAP can be similar between
      countries with political or economic ties.
    §Inflation levels:  Countries with high inflation often
      diverge from historical cost.
    †
    Harmonization in the European Union
    †27 European Union (EU) member countries in
      2012, 17 of which use the Euro as a common
      currency.

    †EU has attempted to harmonize accounting  
      principles of member countries by issuing “directives”
      which often allowed flexible alternative reporting
      practices

    †A 1983 EU directive required the consolidation of
      subsidiaries, a change in practice for a number of
      member countries.
    †
    International Accounting Standards   
    Board (IASB)                                      
    †Successor in 2001 to International Accounting Standards
      Committee (IASC).  Canada was a founding member of
      the IASC in 1973.

    †Current IASB objectives:
    •To develop a single set of high-quality, global accounting standards
      that require transparent and comparable information in general
      purpose financial statements.
    §To cooperate with various national accounting standard-setters in  
      order to achieve convergence in world standards.
    †41 IASB standards in force as of 2012
    †IASB will introduce new International Financial Reporting
      Standards (IFRSs) and International Standards (IASs)
      in the future.
     
    †International adoption of         
    principles-based on IFRS       
    †December 2012, 93 countries including Canada
      currently require the use of IFRSs for all publicly
      traded domestic companies, 5 countries required
      IFRSs for some companies, 23 countries permitted
       but did not require its use.

    †The EU adopted IFRS in 2005 for all publicly traded
      companies (over 8,000) in EU countries.

    †IFRSs are broad-based principles requiring the use of
      judgement in application, resulting in some differences
      in comparability.

     
    †The United States                  
    †Standards set by Financial Accounting Standards
      Board (FASB), a private organization.

    †FASB pronouncements are detailed and rule-based,  
      compared to more general and principle-based standards
      of the IASB.

    †In September 2002 FASB agreed with the ISAB to  
      develop and maintain compatible accounting standards.

    †In 2008, the SEC issued a road map for possible adoption
      of IFRSs by domestic issuers as early as 2014

    †The U.S. Does not permit its domestic public companies
      to report using IFRS’s (one of 30 countries)
    †The United States                  
    †By December 2012 FASB had issued new or amended
      standards to converge with some of IASB’s standards
      for inventory, asset exchanges, accounting changes,
      financial instruments, business combinations, and
      subsequent events.

    †IASB issued new or amended standards to converge with
      FASB’s standards for borrowing costs and segmented reporting.

    †In November 2007 the Securities Exchange Commission (SEC) 
      permitted qualifying foreign companies listed on U.S. Exchange to
      report using IFRS without reconciling to U.S. GAAP
    †The United States                  
    †SEC has issued 7 milestones that could lead to adoption of
      IFRS by U.S. Public companies by 2014.

    • Milestones 1-4 focus on improvements in IFRSs and IASB
      accountability, and U.S. Education on IFRS
    • Milestones 5-7 provide a transition plan for the potential
      mandatory adoption of IFRS in the U.S.

    ØThere are hundreds of differences between U.S. GAAP
       and IFRS  as of December 2012. (see Exhibit 1.4)

    ØWill rules-based U.S. GAAP or principles-based IFRS
      become the international standard?

    §
    †Where is Canada going?       
    †In December 2012 there were 5 parts of the CICA Handbook.
    •Part I  Public accountable entities had to report under
      IFRSs  -- effective January 1, 2011 with some exceptions.

    •Part II  Private enterprises use ASPE –
      -- effective January 1, 2011 (may use IFRS)

    •Part III  Not-for-profit organizations
      -- effective January 1, 2012

    §Part IV  Pension Plans  --- effective January 1, 2011
    §
    §Part V  All other entities not using Parts I-IV will use
      Pre-Changeover GAAP until new parts adopted.


    †Where is Canada going?       
    †
    †All levels of government should follow the PSA
      Handbook.

    †Government business enterprises are expected to
      follow IFRSs

    †Non-Government NFPO’s can follow IFRSs (Part I)
      or Standards for NFPO’s (Part III)
    †Financial Statement Ratios    
    †U.S. GAAP is different  than IFRSs

    †ASPE is different from IFRS’s

    †Different accounting methods have different impacts
      on key financial statement ratios

    •  disclosure of accounting policies in the notes to the
       financial statements is key

    •check notes carefully when comparing entities
      (See Self Study Problem 2)

    †IFRS versus ASPE                 
    †ASPE sometimes allows a choice between different
      reporting methods.

    †Key differences between IFRSs and ASPE include:
    •disclosure requirements
    •impaired loans
    •revaluation and depreciation of components of
      property, plant and equipment
    •impairment losses and subsequent reversal of loss
    •development costs
    •post-employment benefits
    •interest capitalization
    •classification of preferred shares
    代写 IFRS versus ASPE  financial reporting