aicpa survey about ifrs, 2011

Copyright 2011. American Institute of Certified Public Accountants. All rights reserved

IFRS Readiness Tracking Survey

May 2011

1

American Institute of CPAs Copyright 2011. American Institute of Certified Public Accountants. All rights reserved

Survey Background

Semi-annual survey • Conducted 4/19 through 5/11, 2011• 1351 responses – 1167 qualified (BI or Public Practice member)

- 146 from US Public Companies- 185 from US Private Companies- 46 from Foreign Public Companies- 36 from Foreign Private Companies- 35 from Not for profit or educational institutions- 718 from Public Practice

Measures members readiness to implement IFRSIn addition to tracking questions, contains a number of questions unique to this surveyProvides information on their views surrounding other issues related to IFRS adoption

2


Key Messages from IFRS Readiness Survey May 2011

Familiarity with IFRS has remained stable since May 2010U.S. public companies have backed off IFRS planning

• The percentage of respondents in the planning stages of IFRS adoption fell• The number of respondents delaying IFRS preparations until the SEC makes a

decision increased• Preparations by CPAs in public accounting remained steady

Members support adoption of IFRS, although more convergence is desired first

• 51% of members believe a 2015-2016 adoption date would allow enough time for implementation, 17% said no and 32% are unsure

A majority of members are aware of FASB/IASB convergence projects

• However, most do not plan to study the details until standards are issued• A high percentage are unsure whether the proposals will result in improvements• Members are about evenly spread between those that think the pace of change

is too fast, about right or are unsure. Few think the pace is too slow.

3


Familiarity with IFRS

4


Current Familiarity with IFRSAll Members

NA None Basic Some Advanced Expert

Fall 08 4% 30% 39% 21% 4% 1%Spring 09 5% 22% 43% 24% 6% 1%Fall 09 12% 22% 38% 23% 4% 1%Spring 10 5% 16% 47% 25% 5% 1%Fall 10 8% 15% 45% 26% 5% 2%Spring 11 8% 14% 47% 26% 4% 2%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

5


Needed Familiarity with IFRSAll Members


Fall 08 8% 14% 21% 26% 22% 10%Spring 09 7% 11% 21% 24% 28% 8%Fall 09 16% 14% 22% 24% 18% 5%Spring 10 9% 11% 23% 26% 24% 8%Fall 10 12% 10% 24% 25% 22% 8%Spring 11 12% 12% 24% 26% 20% 6%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

6


Familiarity with IFRSCurrent vs NeededAll Members

NA None Basic Some Advanced ExpertCurrent 8.0% 13.7% 46.8% 26.0% 4.0% 1.5%Needed 12.0% 11.6% 24.1% 26.2% 19.9% 6.2%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

7


Familiarity with IFRSUS Public Co Members

0%10%20%30%40%50%60%


Current vs Needed

Current

Needed

0%

10%

20%

30%

40%

50%

60%


Current FamiliarityFall 08

Spring 09

Fall 09

Spring 10

Fall 10

Spring 11

0%

10%

20%

30%

40%

50%

60%


Needed Familiarity Fall 08

Spring 09

Fall 09

Spring 10

Fall 10

Spring 11

8

A fairly large gap still exists between the level of familiarity public company respondents have and what they believe they need

The percentage members who know at least some about IFRS has been climbing steadily since Fall 09

Expectations for Needed Familiarity are also fairly stable


Familiarity with IFRSUS Private Co Respondents

0%

10%

20%

30%

40%

50%

60%


Current vs Needed Familiarity

Current

Needed

0%

10%

20%

30%

40%

50%

60%



Spring 09

Fall 09

Spring 10

Fall 10

Spring 11

0%

10%

20%

30%

40%

50%

60%



Spring 09

Fall 09

Spring 10

Fall 10

Spring 11

9

Members who work for US Private Cos generally have less familiarity with IFRS than they need

However familiarity has consistently grown since October 08

The percentage of members who think they will need at least some knowledge has continued to grow.


Familiarity with IFRSForeign Owned Co Members

0%

10%

20%

30%

40%

50%

60%


Current vs Needed

Current

Needed

0%

10%

20%

30%

40%

50%

60%



Spring 09

Fall 09

Spring 10

Fall 10

Spring 11

0%

10%

20%

30%

40%

50%

60%



Spring 09

Fall 09

Spring 10

Fall 10

Spring 11

10

Like their US counterparts members who work for Foreign companies generally have less familiarity with IFRS than they need but the gaps are smaller

Current familiarity increased slightly this springExpectations for familiarity needed also increased

slightlyCaveat: Because of small number of foreign

company respondents (81) these changes may or may not be significant


Familiarity with IFRSPublic Practice Members

0%

10%

20%

30%

40%

50%

60%


Current vs Needed

Current

Needed

0%

10%

20%

30%

40%

50%

60%


Current Familiarity

Fall 09

Spring 09

Fall 09

Spring 10

Fall 10

Spring 11

0%

10%

20%

30%

40%

50%

60%



Spring 09

Fall 09

Spring 10

Fall 10

Spring 11

11

Members who work for Public Practice continue to have less familiarity with IFRS than they need

The percentage of members with at least Basic knowledge has remained stable for the past year.

Members expectations for what they think they will need have also remained stable


Who Needs Advanced & Expert Knowledge of IFRS?By type of organization

US Public Co US Private Co Public Practice Foreign OwnedSpring 09 59% 21% 30% 65%Fall 09 47% 14% 21% 48%Spring 10 48% 20% 27% 57%Fall 10 44% 22% 26% 52%Spring 11 48% 25% 20% 54%

0%

10%

20%

30%

40%

50%

60%

70%

Percent that need Advanced or Expert Knowledge

12


When is IFRS knowledge Needed?By type of organization

Now Within the nextyear

In the next 2 to3 yrs

In more than 3yrs Not sure

US Public Co 8% 13% 47% 8% 25%US Private Co 9% 16% 33% 6% 37%Public Practice 8% 14% 32% 6% 40%Foreign Owned 41% 28% 26% 2% 2%

0%

10%

20%

30%

40%

50%

60%

70%

13


Adoption and Implementation Plans

14


Prepared to Adopt?By type of organization

NA ‐‐ Noplans

Stillevaluating

Adopting/NotBegun

PreliminaryDiscussions

ActivelyPreparing Ready

US Public Co 10% 39% 18% 19% 13% 1%US Private Co 43% 37% 10% 8% 1% 1%Public Practice 28% 25% 19% 14% 7% 9%Foreign Owned 4% 7% 9% 15% 21% 45%

0%

10%

20%

30%

40%

50%

60%

70%

15

Please rate the extent to which your company (firm) is prepared for IFRS adoption


Prepared to Adopt/Support Adoption?

0%

10%

20%

30%

40%

50%

60%

NA Evaluating Adoptingnot begun


Active Ready

US Public Companies

Fall 08

Spring 09

Fall 09

Spring 10

Fall 10

Spring 11

0%

10%

20%

30%

40%

50%

60%

NA Evaluating Adopting,not begun


Active Ready

US Private Companies

Fall 08

Spring 09

Fall 09

Spring 10

Fall 10

Spring 110%

10%

20%

30%

40%

50%

60%

NA Evaluating Adopting,not begun


Active Ready

Public Practice Fall 08

Spring 09

Fall 09

Spring 10

Fall 10

Spring 11

16

US Companies have been moving slowly out of the evaluation phase

US Private Companies are still not planning to adopt or only in early stages

Most public practice firms are still not prepared for IFRS adoption but there has been an increase in the number of respondent who indicate their firm is ready


Stage of Transition?Asked only of companies in the Preliminary Discussions or Actively Preparing phase

Initial HeavyPlanning Diagnostic Design Implement

ationParallelReporting Completed

US Public Co 47% 2% 32% 15% 2% 2% 0%US Private Co 74% 0% 16% 0% 0% 0% 11%Foreign Owned 12% 2% 14% 5% 9% 9% 50%

0%

10%

20%

30%

40%

50%

60%

70%

80%

17

Please select the stage of transition that best describes the status of your implementation.


IFRS Implementation ChallengesAll Members

67%

41%

47%

19%

58%

51%

11%

70%

19%

62%

27%

39%

35%

34%

9%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Educating CPAs/financial staff

Educating non‐CPAs/non‐…

Educating clients

Updating/changing IT systems

Educating the Public/Managing…

Updating accounting policies

Updating auditing policies

Managing transition

Other

Public Practice B&I

18

What are the largest challenges that implementing IFRS has presented/will present to your firm/company? (Select all that apply)


Views on SEC Decision

19


SEC Decision on IFRS?

YesYes, but onlyafter moreconvergence

No, but IFRSshould be an

option

No, IFRS sholdnot be

mandated orallowed

Unsure

Fall 10 15% 40% 21% 8% 17%Spring 11 14% 39% 23% 10% 14%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

20

On February 24, 2010 the SEC outlined a work plan for the continued consideration of whether and how to incorporate IFRS into the U.S. financial reporting for U.S. issuers. The work plan contemplates a 2011 decision on whether to require or permit IFRS. Do you believe ultimately the SEC should require adoption of IFRS for U.S. public companies?


Timeline for IFRS Adoption?

49%

17%

34%

Public Practice

Yes No Unsure

21

If the SEC makes a decision in 2011 to require or permit use of IFRS for public companies, it believes the first time U.S. companies would report under the system would be 2015 or 2016. Do you believe this timeline will allow enough time for implementation?

50%

21%

29%

US Public Companies

Yes No Unsure

75%

9%

16%

Foreign Owned Companies

Yes No Unsure

Only about half of US Public Accounting firms and Public Companies believe the SEC timeline would permit enough time for implementationMembers from Foreign owned companies, most of whom already use IFRS are much more confident


Delaying IFRS Preparations?

62%

28%

9%

59%

26%15%

63%

15%22%

76%

15%10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Yes No Not applicable

US Public CompaniesFall 09

Spring 10

Fall 10

Spring 11

29%

13%

58%

40%

15%

46%

35%

9%

56%

35%

13%

52%

0%

10%

20%

30%

40%

50%

60%

70%

80%



Fall 09

Spring 10

Fall 10

Spring 11

12%

38%

50%

14%

45%40%

12%

51%

38%

19%

39% 43%

0%

10%

20%

30%

40%

50%

60%

70%

80%


Foreign‐owned Companies

Fall 09

Spring 10

Fall 10

Spring 11

33%23%

45%41%

21%

38%37%

19%

43%41%

16%

44%

0%

10%

20%

30%

40%

50%

60%

70%

80%


Public PracticeFall 09

Spring10Fall 10

Spring11

22

Are you delaying IFRS preparations until the SEC announces that it will set a date certain for its adoption in the United States?


More US Public Companies are Delaying Preparations for IFRS

60%

23%17%

76%

15%10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Yes No Not applicableFall 10 Spring 11

23

Are you delaying IFRS preparations until the SEC announces that it will set a date certain for its adoption in the United States?


IFRS for SMEs

24


IFRS for Small & Medium-sized Entities?

53%47%


Yes

No

61%

39%

Foreign‐owned Companies

Yes

No

52%48%

Public Practice

Yes

No

25

Are you aware that the IASB issued an International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs), which is a simplified, self-contained set of accounting standards designed to meet the financial reporting needs of constituents of private entities?

53%47%

US Public Companies

Yes

No


Adopt IFRS for SMEs?

28%

2%

10%

22%

0% 0%

38%

29%

1%

15%

27%

0% 0%

28%

0%5%10%15%20%25%30%35%40%45%50% US Private Companies

Fall 2010

Spring 2011

15%

2%7%

22%

0%

27% 27%

17%

3% 3%

22%

0%

31%25%

0%5%

10%15%20%25%30%35%40%45%50%

Foreign‐owned Private Companies

Fall 2010

Spring 2011

9%

18% 20%

44%

10%9%

19%22%

40%

11%

0%5%10%15%20%25%30%35%40%45%50%

Yes Yes, butonly if IFRSis requiredfor publiccompanies

No Unsure Does notApply

Public Practice

Fall 2010

Spring 2011

26

Would you consider adopting/would you advise your clients to consider adopting the IASB’s recently issued IFRS for Small and Medium-sized entities?

Fewer respondents working for US entities are unsure about IFRS for SMEs than in the Fall

Respondents working for foreign companies are more certain but are about as equally likely to be positive as to be negative


Convergence

27


Convergence:Awareness of Priority Projects

70%

22%

8%

YesNoUnsure

28

Are you aware that the International Accounting Standards Board (IASB) and the U.S. Financial Accounting Standards Board (FASB) have identified several priority projects, including revenue recognition, leases and financial instruments for completion in 2011?


Converged StandardsRevenue Recognition, Leasing

Have you or do you plan to read the proposals outlined in the exposure draft and follow board deliberation on the proposals? Recognition Leases

No, I will wait for a final standard to be issued 40% 35%

Yes, but I do not plan to study the implications for my company or clients until a final standard is issued 20% 21%

Yes, and I have (or will) investigate how the proposals will affect my company or clients 17% 24%

I am not aware that an exposure draft had been issued 13% 10%

Unsure or Other 10% 10%

29

On June 24, 2010, the U.S. FASB and IASB issued an exposure draft for a proposed standard on Revenue Recognition: Revenue from Contracts with Customers.

On August 17, 2010, the U.S. FASB and IASB issued an exposure draft for a proposed accounting standard to improve the financial reporting of lease contracts.


Converged StandardsRevenue Recognition, Leasing

Do you believe proposals are understandable and think the implementation and application guidance provided is sufficient to make the proposals operational?

Revenue Recognition Leases

Yes 11% 18%

No 16% 19%

Unsure 73% 63%

30




Converged StandardsRevenue Recognition, Leasing, & Financial Instruments

Do you believe the proposals will result in improvements to current accounting requirements?

Revenue Recognition Leases Financial

Instruments

Yes 12% 17% 23%

No 20% 26% 15%

Unsure 68% 57% 62%

31



The U.S. FASB and IASB are working to replace current standards for accounting for financial instruments with a common standard in 2011. The Boards believe that simplification of the accounting requirements for financial instruments should be an outcome of this improvement.


Convergence:Pace of Change

Too fast, 30%

About right, 36%

Too slow, 6%

Unsure, 28%

Too fastAbout rightToo slowUnsure

32

By the end of 2011, FASB and IASB plan to complete major convergence projects outlined in their Memorandum of Understanding and issue several new accounting standards codification updates and IFRS amendments. What is your opinion about the pace of change?


Implementation time

1 year 2 years 3 years More than 3 years Unsure

US Public 3% 22% 28% 32% 15%US Private 4% 21% 28% 27% 20%Public Practice 2% 19% 31% 25% 23%Foreign 11% 37% 34% 10% 10%

0%

5%

10%

15%

20%

25%

30%

35%

40%

33

How long of an implementation period do you believe will be needed to adopt the new converged standards?


Demographics

34

Respondent DemographicsAll Members

62%

12% 16%

4%3%

3%0%

Respondents by Organization Type

Public Practice US Owned Public Co

US Owned Private Co Foreign Owned Public co

Foreign Owned Private Co Not for Profit

Other

44%

56%

Multinational Company (B&I)?

YesNo

13%87%

Multinational Firm (PA)?

YesNo

35


Organization Size

5%4% 1%

15%

6%

38%

7%

23%

US Public Companies $0 to under $10M

$10M to under $50M

$50M to under $100M

$100M to under $500M

$500M to under $1B

$1B to under $5B

$5B to under $10B

over $10B

26%

33%11%

17%

4%7%

1%2%

US Private Companies $0 to under $10M

$10M to under $50M

$50M to under $100M


$500M to under $1B

$1B to under $5B

$5B to under $10B

over $10B

1%

13% 3%

16%

12%18%5%

32%

Foreign‐owned Companies$0 to under $10M

$10M to under $50M

$50M to under $100M


$500M to under $1B

$1B to under $5B

$5B to under $10B

over $10B

54%

12%6%

7%

4%17%

Public PracticeLess than $3M

$3M to under $6M

$6M to under $10M

$10M to under $20M

$20M to under $40M

Over $40M

36

aicpa survey about ifrs, 2011

Documents