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EY IFRSComments - April 2008 Critical insights for todays...

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Are you ready for IFRS? What US audit committees need to know about IFRS The convergence of US and international accounting standards is currently capturing significant attention, and it is possible that the US Securities and Exchange Commission (SEC) will provide US companies with the option, if not the mandate, to report results under International Financial Reporting Standards (IFRS). With that in mind, now is the time to prepare. This issue of BoardMatters Quarterly is dedicated to IFRS and features articles about the SEC’s recent activities in this area, what IFRS means for your company as an issuer, an interview with the chief accounting officer at BP about how his organization mananged the conversion process and two examples of the kinds of changes you can expect to see as a result of converting to IFRS. We hope these perspectives on IFRS will help you examine your conversion needs and what you can begin doing now. Please feel free to contact us with your feedback on this issue of BoardMatters Quarterly , or with your ideas for future issues. We encourage you to share this information with your colleagues and ask that you let us know of others who would benefit by receiving this publication. Send your feedback to Meaghan Levasseur at [email protected] . In this issue: Is IFRS in the near future for US companies? .............. 2 IFRS: what it means to issuers ............................ 3 IFRS conversion: lessons learned from BP ...... 6 US GAAP vs. IFRS – practical examples .............. 8 We are pleased to introduce you to a new look and feel for BoardMatters Quarterl y which has been re-designed as part of Ernst & Young’s new global visual identity. C ritical insights for today’s audit committee April 2008 BoardMatters Quarterly
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The movement towards International Financial Reporting Standards (IFRS) as the leading financial reporting framework for the global capital markets has moved more quickly than most people expected. During the second half of 2007, dialogue about whether IFRS ultimately will replace US GAAP increased throughout the marketplace. Much of this dialogue stems from the US Securities and Exchange Commission’s (SEC) continued focus on IFRS, beginning with its proposal in July 2007 and its final decision in November 2007 to eliminate the US GAAP reconciliation requirement for foreign private issuers that use IFRS as issued by the International Accounting Standards Board (IASB). The SEC extended the debate to US domestic companies by issuing a Concept Release in August 2007 regarding the possibility of providing US issuers with an option to use IFRS. The dialogue intensified during roundtables that the SEC conducted in December to solicit additional feedback on the potential use of IFRS by US domestic companies. Not unexpectedly, roundtable participants expressed strong support for a “single set of high-quality global accounting standards” that could be used by companies around the world, for the benefit of users and companies alike. There is little question that IFRS will be those standards. However,
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