University of Mississippi eGrove American Institute of Certified Public Guides, Handbooks and Manuals Accountants (AICPA) Historical Collection 2009 IFRS digest : what U.S. practitioners and entities need to know now Donna L. Street Belverd E. Needles Follow this and additional works at: https://egrove.olemiss.edu/aicpa_guides Part of the Accounting Commons, and the Taxation Commons IFRS Digest: What U.S. Practitioners and Entities Need to Know Now IFRS Diaest: What U.S. Practitioners and Entities Need to Know Now Editors Donna L. Street, Ph.D. Belverd E. Needles Jr., Ph.D., CPA A m e r i c a n I n s t it u t e o f C e r t i f i e d IFRS Digest: P u b l ic A What U.S. Practitioners and c c o u n t a n t s Entities Need to Know Now Editors Donna L. Street, Ph.D. Belverd E. Needles Jr., Ph.D., CPA NOTICE TO READERS IFRS Digest: What U.S. Practitioners and Entities Need to Know Now does not represent an official position of the American Institute of Certified Public Accountants, and it is distributed with the under- standing that the author and publisher are not rendering legal, accounting, or other professional serv- ices in the publication. If legal advice or other expert assistance is required, the services of a compe- tent professional should be sought. Copyright © 2009 by American Institute of Certified Public Accountants, Inc., New York, NY 10036-8775 All rights reserved. For information about the procedure for requesting permission to make copies of any part of this work, please email [email protected] with your request. Otherwise, requests should be written and mailed to the Permissions Department, AICPA, 220 Leigh Farm Road, Durham, NC 27707-8110. 1 2 3 4 5 6 7 8 9 CS 9 ISBN: 978-0-87051-798-3 Publisher: Linda Prentice Cohen Senior Managing Editor: Amy M. Stainken Developmental Editor: Andrew Grow Project Manager: Amy Sykes Cover Design Direction: Clay Porter ii About the Editors Donna L. Street, PhD Professor Street is the Mahrt Chair in Accounting at the University of Dayton (USA). She is active in sev- eral academic and professional organizations. Currently she serves as President of the International Association for Accounting Education and Research (IAAER). She also serves on the Education Advisory Group of the IASC Foundation Trustees. Street previously served as President of Beta Alpha Psi and of the International Section of the American Accounting Association (AAA). Street received the Virginia Society of CPAs Outstanding Accounting Educator Award in 1999 and the AAA International Accounting Section Service Award in 2004. In 2007, Street received the Outstanding International Accounting Educator Award from the AAA International Accounting Section. Professor Street has published several papers in journals including Behavioral Research in Accounting; Accounting and Business Research; Accounting Horizons; International Journal of Accounting; Journal of International Financial Management and Accounting; Journal of Inter-national Accounting Research; Journal of International Accounting, Auditing, and Taxation; Journal of Accountancy; CPA Journal, and Accountancy International. She is co-editor of the Institutional Perspectives section of the Journal of International Financial Management and serves on the editorial body of the Journal of International Accounting Research and the Journal of International Accounting, Auditing, and Taxation. Her research endeavors focus on international accounting standards and financial reporting in general. Belverd E. Needles, Jr., Ph.D. CPA, CMA Ernst & Young Distinguished Professor of Accounting, DePaul University Belverd E. Needles, Jr. received BBA and MBA degrees from Texas Tech University and the Ph.D. degree from the University of Illinois at Urbana/Champaign. He teaches financial accounting, managerial account- ing, and auditing at DePaul University, where he is an internationally recognized expert in international accounting and education. He has published in leading journals and is the author or editor of more than 20 books and monographs. His current research relates to international financial reporting, performance measurement, and corporate governance of high performance companies in the US, Europe, India, and Australia. His textbooks are used throughout the world and received many awards, including in 2008, the McGuffey Award from the Text and Academic Authors Association. Active in many academic and professional organizations, he is currently Vice-President-Education- Elect of the American Accounting Association. He is the past Chair of the Board of Directors of the Illinois CPA Society and past-president of the International Association for Accounting Education and Research (IAAER). He served as the elected U.S. representative to the European Accounting Association, chair of the International Accounting Section of the American Accounting Association, director of continuing educa- tion for the American Accounting Association, and president of the Federation of Schools of Accountancy. He served as chair of the Academic and Career Development Executive Committee and on the Information Technology Executive Committee of the American Institute of CPAs. He served as the United States repre- sentative on the Education Committee of the International Federation of Accountants (IFAC) and on the Consultative Group of the International Accounting Standards Committee (IASC). He serves on the Board of Directors and Chair of the Audit Committee of Ziegler Companies, Inc., a boutique capital markets and financial services company. He has received the Distinguished Alumni Award from Texas Tech University, the Illinois CPA Society Outstanding Educator Award and its Life-Time Achievement Award, the Joseph A. Silvoso Faculty Award of Merit from the Federation of Schools of Accountancy, the Ledger & Quill Award of Merit, and the Ledger & Quill Teaching Excellence Award. He was named Educator of the Year by the American Institute of CPAs, Accountant of the Year for Education by the national honorary society Beta Alpha Psi, and Outstanding International Accounting Educator by the American Accounting Association. He has received the Excellence in Teaching Award from DePaul University. iii Foreword It is difficult to envision a more perfect storm of events converging to invite inquiry, encourage debate and necessitate change than the one that confronts US accounting and financial reporting today. Global and domestic economic factors, changes in the standards setting process at home and abroad, and a host of other forces are at play, making this an unpredictable and fascinating time to be in this profession. CPAs have a longstanding reputation for bringing current and important issues to the attention of the business community. The challenges and change management associated with IFRS will require the CPA profession to take a leading role in deliberation, discussion and decision-making in a critical emerging area. Some in our profession may find it hard to resist the temptation to turn our backs on the new devel- opments in an effort to stick with the principles and rules we already know. The unavoidable truth is that major change will soon arrive on our collective doorsteps, whether we are opposed or in favor of the changes, prudent professionals will confront the changes early, engage in the process of defining them, understand them thoroughly, and then take action. As the largest membership organization for the accounting profession in the world, the AICPA has taken an active role in that process on an orga- nizational level. We feel that now is the time to begin the process in earnest at the level of our individ- ual member firms and organizations. In that regard, with respect to IFRS, we hope this book will be a useful and important tool. The AICPA supports one set of high-quality global accounting standards for public companies. We believe the capital markets ultimately will insist on this, and that IFRS, which is already in broad use across the globe, will be the standard selected. The United States Securities and Exchange Commission’s publication of a proposed Roadmap to IFRS adoption was a logical and inevitable step in a robust and thoughtful convergence process which has been underway for some time. AICPA supports SEC’s efforts via the following initiatives: · Ongoing collaboration among the Financial Accounting Standards Board, the International Accounting Standards Board and the International Accounting Standards Committee Foundation to bring the convergence milestones set forth in the Roadmap to fruition and achieve convergence on terms that are in the best interests of US and global accounting. · Making certain the voice of U.S. CPAs is heard internationally. · Preparing for the shift to IFRS-based reporting using eXtensible Business Reporting Language (XBRL). · Ensuring accounting educators, textbook authors and educational institutions have the resources needed to prepare future professionals to use IFRS. · Taking steps toward incorporation of questions about IFRS into the Uniform CPA Examination at the appropriate time. A critical initial step is the development and implementation of a project plan that directs all com- ponents of the financial reporting system toward achieving the milestones laid out by the SEC. We are actively working with our various constituencies to develop and implement such a plan. v The very first step in any change process, of course, is awareness. For that reason, and with the gratefully acknowledged assistance of our outside editors, we have