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International Accounting Standards

Board

International International Accounting Standards Accounting Standards BoardBoard

A set of slides to support our outreach activities 2006/7

®Outline Outline

The Vision Improved independence Convergence Stability Due Process and Responsiveness Principles versus Rules Measurement Our agenda

®The VisionThe Vision

…one single set of high

quality global standards..

..used on the global

capital markets.

®The CriticsThe Critics

Threatening stability of …

Fair value fixated

Too theoretical

Don’t understand our region’s situation …

US dominated

Not listening

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News 2005 / 2006News 2005 / 2006

Formation of a Trustee Advisory Group New and more Trustees Revised constitution Due process Handbooks Changes within the Board New and more staff on board

®Independent standard settingIndependent standard setting

Independent board members All board meetings in public Internet simulcast Thorough due process Improved oversight Private funding

®IASB’s structureIASB’s structure

22 Trustees

StandardsAdvisoryCouncil

IASB14 board members35 technical staff

IFRIC

National Standard Setters

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IASB 2001 – 2006IASB 2001 – 2006- five years of progress- five years of progress

IFRS established as the role model for financial reporting for listed companies

A substantial up-grade of standards completed 2004 : the Stable Platform

Global convergence is now in true progress Workplan agreed US and Europe Japan and China moving towards IFRS

®Convergence !Convergence !

Attracting investment by transparency Supports cross-border investments Reducing cost of capital Reducing operational expenses US, China, Japan, others

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Stability Stability - - with responsivenesswith responsiveness

Only one major change a year No new major standard change

mandatory before 2009 After approval of standard:

12 months before mandatory

®Opinions encouragedOpinions encouraged

The IASB work program is public and open for discussion

Working groups and round tables are now common

Discussion papers more frequent Due process handbook published

®Thorough due processThorough due process

Issuance of new standards, changes of existing and interpretations done only after allowing for opinions from anyone interested

Comment periods enhanced

®Thorough due processThorough due process

Research

National

Standard

Setters

Discussion

Paper

Exposure

DraftStandard

Others

Comment

analysis

Comment

analysisEffective

Date

®Thorough due processThorough due process

Research

National

Standard

Setters

Discussion

Paper

Exposure

DraftStandard

Others

Comment

analysis

Comment

analysisEffective

Date

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What do we look for in What do we look for in comment letters?comment letters?

InformationDid we miss something?

ArgumentDoes the proposal improve decision-

useful information? Is the benefit in proportion with the costs?

®The Due ProcessThe Due Process

“…they will have to learn to listen to my views…”

Does it mean to obey? - or to listen, consider, form an opinion and decide?

®Thorough due processThorough due process

Research

National

Standard

Setters

Discussion

Paper

Exposure

DraftStandard

Others

Comment

analysis

Comment

analysisEffective

Date

®Principle-based standardsPrinciple-based standards

PrinciplesPrinciples RulesRules

®Principle-based standardsPrinciple-based standards

Few, if any, scope exceptions Few, if any, special provisions Consistency across the set of

standards Explain reasoning for deviating from

principles

®Principle-based standardsPrinciple-based standards

Implications for preparersauditors regulators

®MeasurementMeasurement

Open roundtable discussions as part of the framework project to consider:

What are the available measurement attributes?

What information does each provide?How should the IASB think about the

choices?

®MeasurementMeasurement

Present Fair Value Measurement project – how, not when or whether

The Canadian FVM discussion paper – part of the Framework project

®Convergence with FASBConvergence with FASB

A MOU agreed between IASB and FASB publicly supported by USA and Europe Aiming to eliminate reconciliation

Short to medium term projects with quick implementation

Projects with a medium or long term view and requiring substantial work

®The Active AgendaThe Active Agenda

Conceptual framework

Revenue recognition Financial Statement

Presentation Business combinations Liabilities Insurance Fair value measurement Financial instruments

Leasing Pensions Consolidations Small and Medium

sized entities Emission rights trading Short term

convergence x 10

®The Research AgendaThe Research Agenda

Financial instruments Derecognition Liabilities and equity Extractive activities Intangible assets

®The Conceptual FrameworkThe Conceptual Framework

A guidance for the board when setting standards and support for preparers when lack of applicable standards

Present framework established 1989

A joint IASB – FASB long term project 8 phases Discussion paper published over the first phase Objectives and Qualitative Characteristics

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Small and Medium sized EntitiesSmall and Medium sized Entities

Much asked for SMEs = 95% of all companies

Simplification of the big book Stand alone document Recognition and measurement simplifications

Designed with a company of 50 employees in mind Each jurisdiction decides who uses Not for listed companies or financial institutions

Exposure Draft to be published 2006 250 pages

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Global convergenceGlobal convergence- a value creating activity- a value creating activity

High quality common standards:

Better understandingLower expenses

= Better investments

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The World is getting smallerThe World is getting smaller

RED = IFRS Approved

ORANGE = Stated move to adoption

YELLOW = Adapting to IFRSs

IFRSs Around the World

®The VisionThe Vision

…one single set of high

quality global standards..

..used on the global

capital markets.

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Get more information at:Get more information at:www.iasb.orgwww.iasb.org