International Financial Reporting Standards - IAS Plus

1 Assurance ServicesInternational Financial Reporting StandardsOf Growing Importance for Companiesthere is no longer achoiceThree factors may influence your need toconsider IFRS. First, many organizations willbe obligated to report using IFRS due to acountry s requirements. Below are just someof the possible scenarios where IFRS wouldbe required. subsidiaries of companies operatingin jurisdictions where IFRS is the accept-ed standard need to follow the sameaccounting Standards as their corporateparents. joint ventures with a venture partneroperating in countries requiring IFRS alsoneed to follow the same accounting stan-dards as their venture partner. multinationals seeking to enter newmarkets and expand operations to a for-eign country may need to report usingIFRS in order to obtain an operatinglicense or raise , some companies will want to con-sider supplementing their current Reporting with Financial informationprepared on an IFRS basis.

2 This is particular-ly true for companies with foreign com-petition who may want to supplement theirreporting with information based on IFRS inorder to compare their operating and finan-cial results with European and Asian may be particularly true for entitiesoperating in the manufacturing, banking,insurance, automotive, and will have a marked impact on all ofthese entities, and should be evaluated with-out delay. Third, the International Accounting Stan-dards Board and the Financial AccountingStandards Board in the United States arejointly advancing a converged set of stan-dards. Under a recent agreement, both bod-ies will propose changes to their respectivestandards that reflect common solutions tospecific differences. The first step is to elimi-nate a number of differences in the shortterm, by selecting current practice eitherunder existing IFRS or GAAP.

3 The long-term objective is for both organizations towork together to reduce or eliminate remain-ing disparities on an ongoing basis, througha series of joint projects and in coordinationof future work programs. In addition, bothorganizations have agreed to work togetherthrough their respective interpretive bodiesin converging interpretation and is InevitableDeloitte & Touche Partner Gannon discusses the growing importance of IFRS in the Unit-ed States: Right now, there are close to 1,400 companies with shares listed in theUnited States. Only about 50 are currently using IFRS, and they have to reconcile their finan-cials with GAAP. This number could climb to between 500 and 600 as European compa-nies convert from their home country Standards to IFRS. In the next few years, GAAP may resemble IFRS so closely that the SEC could acceptIFRS-based filings by foreign private issuers in place of GAAP. This might even set thestage for the SEC to give companies the option of using IFRS.

4 A few years ago, International Financial Reporting Standards (IFRS) were a distant possibility. Today, the reality is far dif-ferent. We are in a dramatic shift that is fast making IFRS themost widely accepted accounting model in the world. As the business environment becomes increasingly globaland companies routinely list on stock exchanges in manycountries, the need for consistent worldwide Reporting stan-dards intensifies. IFRS, formerly known as InternationalAccounting Standards , clearly addresses this issue; its goal isto create comparable, reliable, and transparent Financial state-ments that will facilitate greater cross-border capital raisingand converting to IFRS is a complex process, these stan-dards have important and positive implications for organiza-tions and individuals that adopt companies: reduced cost of capital and the ease ofusing one consistent Reporting standard from subsidiariesin many different countries.

5 Investors: better information for decision making,leading to broader investment national regulatory bodies: better information for market participants in a disclosure-based system. Without question, the time has come for IFRS. Companies inthe United States are being affected by the Standards now: theforces driving IFRS call for prompt action. Deloitte & Touchecan help you determine your company s specific needs andassist you in making the transition to need for globalconsistencyThe European Union has led the way in making IFRS compulsory. In May 2002, theEuropean Parliament ruled that the consolidated Financial statements of substantially allcompanies domiciled in the EU with public shares listed on an EU stock exchange mustfollow IFRS beginning January 1, decision affects more than 7,000 companies that currently use their home country sGAAP, and is accelerating the transition to IFRS by corporations on six RepublicDenmarkEstoniaFinlandFranceGeorg iaGermanyGreeceHungaryIrelandItalyKyrgys tanLatviaLithuaniaLuxembourgMacedoniaMal taNetherlandsNorwayPolandPortugalRomania RussiaSlovakiaSloveniaSpainSwedenSwitzer landTajikistanUkraineUnited KingdomBahamasBarbadosCosta RicaDominican RepublicEcuadorGuyanaHaitiHondurasJamaic aPanamaPapua New GuineaPeruTrinidad & TobagoArgentinaBrazilCanadaCayman IslandsChileGuatemalaMexicoUruguayVenezu elaUnited StatesAustraliaBruneiNepalSingaporeTaiwa nNew ZealandChina/Hong KongIndiaIndonesiaJapanSouth KoreaMalaysiaPhilippinesThailandEgyptJor danKenyaKuwaitMalawiMauritiusOmanTunesia IranIsraelPakistanSouth AfricaZimbabweUse of International Financial Reporting StandardsRequires IFRSC onverging with IFRS Europe/Central Asia Americas Asia-Pacific Africa/Middle EastMoldovaUzbekistanIFRS signifies a new era of Financial Reporting that willeventually touch

6 Thousands of companies. Itsimpact on GAAP will deepen as it becomes theprevailing global accounting standard. Ultimately, anew global standard will emerge that represents criti-cal aspects both of IFRS and GAAP. The broader a company s International activities, thegreater the effect of IFRS. Some companies will needto adopt IFRS now to meet International financialreporting and lending requirements. Others will recognize the need to supplement current GAAP Reporting with IFRS commentary to allow more accu-rate comparison to foreign way, Deloitte & Touche can help determine yourcompany s specific needs and assist you in making thetransition to IFRS. To learn more, visit the IAS Plus Web site at time has come foryour next step 2003 Deloitte & Touche & Touche refers to Deloitte & Touche LLP and related entitiesDeloitte & Touche, one of the nation s leadingprofessional services firms, provides assuranceand advisory, tax, and management consultingservices through nearly 30,000 people in morethan 100 cities.

7 The firm is dedicated tohelping its clients and its people excel. Knownas an employer of choice for innovative humanresources programs, Deloitte & Touche hasbeen recognized as one of the 100 Best Companies to Work For in America by Fortunemagazine for six consecutive years. Deloitte &Touche refers to Deloitte & Touche LLP andrelated entities. Deloitte & Touche is the practice of Deloitte Touche Touche Tohmatsu is a Swiss Verein,and each of its national practices is a separateand independent legal entity. For more information, please visit Deloitte & Touche sWeb site at 2003#3069