1. Jana Raedy University of North Carolina
IFRS in the classroom
Jana Raedy
University of North Carolina

2. History of IFRS
Initial 14 members are appointed to the IASB
The IASB begins promulgating standards as IFRS from IAS. The SIC becomes the IFRIC-2002.
The European Union endorses IFRS for 2005 adoption
Norwalk Agreement is executed between the IASB and FASB
SEC published a roadmap (Roadmap) for elimination of a US GAAP reconciliation for FPIs
The FASB and IASB published a Memorandum of Understanding, to set forth priorities in their joint work program
1970s
1980s
1990s
2000s
SEC eliminated the US GAAP reconciliation for FPIs
SEC (under Chairman Cox) published a proposed Roadmap for the mandatory adoption of IFRS in the US
FASB and IASB reaffirmed their commitment to the MOU
SEC established a Work Plan for its 2011 IFRS adoption decision
IASC Advisory Council formed to provide oversight of IASC
Standards Interpretations Committee (SIC) is formed
IASC is restructured to form a new board: the IASB – 1999.
The IASC is formed – 1973.
Courtesy of Ernst &Young Foundation

3. Global Use of IFRS Courtesy of Ernst &Young Foundation
IFRS required or permitted
No action taken/date set for adoption
Local GAAP based on legacy IAS
In process of adopting or converting to IFRS
Courtesy of Ernst &Young Foundation

4. Outlook for the use of IFRS in the US Timing
Currently FASB and IASB are working on many convergence projects that are to be completed in
Consolidation, Fair value measurement, Financial instruments, Financial statement presentation (presentation of OCI), Leases, Revenue recognition
SEC expected to come to some decision in 2011
Based upon recent statements – my guess is not until the latter part of the year
SEC will allow a minimum of four years to adjust if it mandates the use of IFRS. This would mean the use of IFRS in 2015 at the earliest.

5. Outlook for the use of IFRS in the US Possible Methods
Adoption: US would practice under IFRS as issued with no modifications.
Convergence: US would practice under US GAAP with efforts to converge differences with IFRS standards over time.
Endorsement: US would review each IFRS standard as issued and determines whether the standard should be endorsed for practice with or without modification.
Condorsement (SEC currently discussing):
US GAAP would continue to exist.
The IASB and FASB would finish the major convergence projects in the MOU.
The FASB would work on the following simultaneously:
No new major projects but rather set priorities of converging US GAAP (remaining topics not on the current agenda) to IFRS. This would be to make sure that these existing IFRS standards are suitable for US capital markets.
Consider new standards issued by the IASB for endorsement (but not required) or incorporation (required) into US GAAP. This would ideally be issuing the standards in the codification without modification. This would also assume the US involvement in IFRS standard setting.
This approach would allow the US to maintain control of US standards.

6. How different are IFRS and US GAAP?
Big, big picture:
Not very different. Principles are virtually identical.
Conceptual Framework is one convergence project.
Big picture, by topic (typical intermediate coverage):
Some differences, but not insurmountable for the classroom.
Detailed level (what might be encountered in practice):
Lots of differences.

7. Is it important for students to learn IFRS?
YES! And we should be teaching it now.
Foreign subs located in the US are on IFRS.
US multinationals have foreign subs on IFRS.
Foreign private issuers trading in the US are only required to file IFRS reports.
Much more likely now that students will do global rotations
Competitive advantage for students
CPA Exam now covers IFRS (effective January 2011)
Recruiting firms are interested in students having IFRS knowledge

8. Let’s view it as an opportunity
To assess current curriculum
Some topics no longer that important (extraordinary items)
Some are infrequent in practice (non-monetary exchanges of assets, involuntary conversion of assets, sum-of-the-years-digits depreciation)
Some are industry specific (depletion)
Some aren’t allowed under typical circumstances (revenue recognition - installment and cost recovery methods)
Others need to be added (revenue recognition – multiple deliverable, tax provisions, revaluations)

9. Let’s view it as an opportunity
To build other skills our students need
Judgment/Decision Making Skills
US GAAP relies extensively on judgment - IFRS even more so
Critical Thinking Skills
ability to read and interpret authoritative accounting literature
ability to think about business problems
ability to understand the reasons behind standards

10. How should we put it in our curriculum?
Fully integrated or as a stand-alone course?
Full integration
Stand Alone
US GAAP knowledge
Don’t spend time relearning US GAAP
Provides a good review of US GAAP (use pre-class homework)
Confusing?
Requires students to sort out 2 sets of standards while they are still trying to learn
Can get US GAAP under their belts before attempting a “2nd language”.
Faculty involvement
Involves more faculty
Minimizes number of faculty involved

11. How do we make room? Students don’t remember them anyway.
LESS RULES!
Students don’t remember them anyway.
We can’t even teach all of US GAAP rules now.
MORE emphasis on:
Teaching students to find the authoritative literature and interpret the standards for themselves.
If we do this, then we don’t need to teach then every little rule.
Creating a classroom/curriculum that provides opportunities for students to enhance their critical thinking, decision-making and judgment skills.
Research Cases
Basis for Conclusions
Debate Cases

12. Integration into Intro course
My suggestions:
Intro to IFRS (similar to what I’ve provided today)
Discussion of principles vs. rules
Discussion of the need for judgment and critical thinking skills.
Needed for US GAAP, even more so for IFRS
Very basic coverage of differences between US GAAP and IFRS. For example:
Inventory – LIFO not allowed under IFRS
LTOA – can be revalued under IFRS
Hybrid securities – bifurcated under IFRS

13. Resources Coming soon! 
Gordon, Raedy and Sannella, Intermediate Accounting
Fully integrated textbook
Focus on judgment and critical thinking skills without sacrificing necessary rules

14. Standard setters and regulators
International Accounting Standards Board (IASB)
Securities and Exchange Commission (SEC)
globalaccountingstandards.shtml
Financial Accounting Standards Board (FASB)

15. Organizations
 International Association of Accounting Education and Research (IAAER)
American Institute of Certified Public Accountants (AICPA)
American Accounting Association (AAA) –
look to International Accounting Section

16. Access to eIFRS
part of Membership
*Individual ,
Student or
Institution

17. Accounting Firm Sites

20. Ernst & Young Foundation Materials
For access to these materials contact Catherine Banks

21. Q&A
What would you like to discuss?
Thanks for your time!