Ifrs Compared to Us Gaap

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Document 1 of 75 Source: International/Financial Reporting/KPMG Guidance/IFRS GAAP Comparisons/IFRS compared to U.S. GAAP

The information contained herein is for internal and external use.

IFRS compared to U.S. GAAP
On the road to convergence About this publication Contents 1. Background 2. General issues 3. Statement of financial position 4. Specific items of profit or loss and comprehensive income 5. Special topics Appendix 1 - Abbreviations used for pronouncements Appendix 2 - IASB / FASB convergence projects Document 2 of 75 Source: International/Financial Reporting/KPMG Guidance/IFRS GAAP Comparisons/IFRS compared to U.S. GAAP/On the road to convergence

The information contained herein is for internal and external use.

On the road to convergence
Change can be difficult. Change makes us nervous. Most people resist change as it makes us face the unknown. But change can be good. And eventually change becomes the norm. Over the past 10 years we have seen a rapidly changing environment in the world of accounting and financial reporting. Good progress has been made towards the establishment of a single set of high quality, globally accepted accounting standards - but we have not yet achieved that goal. However, we must also be careful in defining what our ultimate goal is. Is it convergence of U.S. Generally Accepted Accounting Principles (U.S. GAAP) to International Financial Reporting Standards (IFRSs), or conversion from U.S. GAAP to IFRSs? These are two different things and may cause an expectation gap when looking at the results of convergence. In the past few years we have seen the results of one of the key convergence projects of the International

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16/08/2010

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Accounting Standards Board (IASB) and the U.S. Financial Accounting Standards Board (FASB). In December 2007 the FASB issued SFAS 141R Business Combinations (ASC Subtopic 805) and in January 2008 the IASB issued revised IFRS 3 Business Combinations. These two standards represent a "substantially" converged standard on the accounting for business combinations. But you may be wondering why we refer to them as substantially converged. You also may be wondering why the IASB and the FASB did not issue identical standards as the project was carried out as a joint project with the goal of convergence. This underlies a key aspect of convergence. The process of attempting to dissect and eliminate every possible difference that may be experienced in practice would be very costly and time consuming, if not impossible. A more effective approach focuses on aligning the general principles and overall methodologies. This is further illustrated in other converged standards such as assets held for sale and discontinued operations, operating segments, borrowing costs, and share-based payment. Although the general principles and overall methodology of these standards are converged, we continue to experience differences in the detail, and therefore should avoid a false sense of security that convergence eliminates all significant differences. While the IASB and the FASB continue to work on convergence, the U.S. Securities and Exchange Commission (SEC) has made significant progress to increase the acceptance of IFRSs. The SEC's decision to accept foreign private issuers' financial statements prepared in accordance with IFRSs as issued by the IASB without reconciliation to U.S. GAAP has demonstrated the SEC's willingness to continue to support work towards convergence. Additionally, the SEC currently is considering if - or when - it would allow U.S. domestic filers the option of applying IFRSs as an alternative to applying U.S. GAAP or whether it might require the use of IFRSs. With these accomplishments in mind, we are pleased to publish our comparison of IFRSs and U.S. GAAP as of 1 August 2009. We hope that this publication continues to...
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