The International Financial Reporting Standards a Report on the Roadmap and Roadblocks to Implementation free essay sample

A Report on the Roadmap and Roadblocks to Implementation in the US and Abroad Robert B. Shaw Term Paper Prof. Paul Strohmenger GBA 521 002 Financial Accounting and Reporting Fall Semester December 2010 2) how is it progressing? 3) how does it differ from GAAP? 4) will it be implemented how? The International Financial Reporting Standards, otherwise widely known as the IFRS, are a set of high quality financial reporting standards that are designed to be used globally by profit making enterprises. The continuous development of such international standards is an example of the international harmonization witnessed in the global financial sector over the last two to three decades. The history of the IFRS only spans the length of a decade or so and can be best summarized by the following milestones. (www. ifrs. org) In 2001, the International Accounting Standards Board (IASB) and the International Accounting Standards Committee (IASC) Foundation were formed. The next year the European Union passed regulation to adopt IFRS for listed entities in the year 2005. We will write a custom essay sample on The International Financial Reporting Standards: a Report on the Roadmap and Roadblocks to Implementation or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page In addition, the FASB and the IASB signed the â€Å"The Norwalk Agreement† which was a commitment to reduce differences between US GAAP and IFRS. This was the beginning of all the conversion efforts that are presently in process today. By the year 2005, nearly 7,000 listed entities in Europe adopted IFRS. The following year brought about an announcement from the IASB regarding a â€Å"three year stable platform period,† in which entities that have already adopted IFRS will not need to implement new IFRS until 2009. In 2007, the SEC removed the reconciliation requirement for non-U. S entities reporting under IFRS. This single act brought about further pressure from all the parties in the global financial community to further support IFRS. A proposed roadmap was published in 2008 by the SEC which identified potential mandatory adoption of IFRS by U. S. Filers. Finally, the most recent major actions in relation to IFRS were the reluctance to fully support the roadmap to IFRS by the Mary Shapiro, the current SEC Chairman, and the Group of Twentys (G20) support of IFRS as the most important step towards reforming the current global financial system. www. iasb. org) The IFRS was originally established by the International Accounting Standards Board (predecessor is the International Accounting Standards Committee? ) and its located in London, UK. The IASB is a full time organization, and functions independent of preparers, auditing organizations, and accounting agencies. The IASB has 14 board members which consists of a balance of financial industry leaders. These le aders are appointed based on their technical expertise as well as their experience in their respective fields. This ensures that the balance between these diverse groups produces a set of standards that satisfies the needs of the various users in the ever-developing, global version of the investor-creditor financial community. (www. kpmg. com) It is now apparent more than ever that the world is attempting to come together in the accounting and financial reporting arena. As it stands, the US adheres to its own Generally Accepted Accounting Principles (US GAAP) while the rest of the world has gradually accepted that the IFRS standards are needed and welcomed. This is due to the fact that capital resources are required around the world. Therefore, investors need a uniform set of standards and this is further supported by the open acceptance by international organizations such as the G-20. The original goal of the IASC was to have onset of standards so that every investor in the world would understand the principles that go into the creation of corporate financial reports and corporate financial statements. Those in support of the IFRS argue that global accounting standards will improve the functioning of global capital markets by providing better information to investors and other users of financial statements. They will achiever this by decreasing the cost of preparing and interpreting financial statements and reduce the cost of capital. Some of the additional benefits are specific to certain groups. The capital markets will benefit from enhanced world wide comparability for investors and more efficient capital allocation. In addition, foreign investors will perceive enhanced credibility of local market entities while US securities will be suitable for foreign listings. Finally, the IFRS will eliminate the need to develop and maintain national standards. On the other hand, the benefits to companies include easier consolidation and cross-border acquisitions and increases the overall understanding of the financial statements of overseas suppliers, customers, vendors, and subsidiaries. However, though the benefits seems very clear to the global financial community, there seems to be an apparent hesitation on the part of the US to adopt or immediately identify specific intent to implement IFRS. The notion is that IFRS doesnt have strong guidance and will lead to further chaos. Especially, if it is accepted in haste. www. bcbs. org) In relation to the progression of acceptance abroad there is a stark contrast between those who support IFRS and those who do not. Since 2000, with the creation of the IASB and its takeover from its predecessor, the acceptance of these standards saw a substantial increase in its use, especially by European countries. Switzerland was one of the first major countries to apply the standards. All of the major fina ncial markets in the world recognized the standards after Australia and the European Union recognized the standards. The United States has yet to adopt the standards as the SEC still subscribes to the US GAAP regulations and standards. These standards are primarily for listed companies but each jurisdiction may adjust the standards to their particular needs. The point of having one set of financial reporting standards is for investors to invest time into understanding only one set of principles that is useful for all investors. However, it doesnt limit the corporation from using other reporting tools or options. As it stands, the SEC is interested in IFRS but the question must be asked: What are the incentives? Why would the SEC be interested in converting from GAAP? Mary L. Schapiro, SEC Chairman since 2009, has stated that she is committed to convergence and has a roadmap to implementation in place. The SEC currently has a 5 year plan that doesnt specify a date for adoption. There is an opposition that exists within the US and there is evidence that supports there position. The details of the standards are flexible in that they may be changed in regards to the details of interpretations, recognition, and alternatives in reporting. (www. sec. org) The US is hesitant to rapidly implement this reporting standard for two main reasons. One is the US Taxation system and the other is the need to have trained professionals prepared to handle this workload. To expand on this, these are the requirements necessary for the potential use of IFRS in the U. S. The requirements are improvements in the accounting standards, the accountability and funding of the IASC Foundation, the improvement in the ability to use interactive data for IFRS reporting and the immediate need for education and training. However, the SECs roadmap is actually a 5 year convergence plan. There are three areas of concern that are key to the SEC Chairman. They include the pace of the timeline, the independence of the IASB and the cost of the IFRS adoption. These concerns are all valid, but it is more likely that this delay is truly due to the change in the political party that is currently in office. (www. sec. org) The global perspective is different as GAAP exists for each country independently in that each has they each originally had their own respective set of standards. Approximately 110 of the 195 countries on the planet have accepted IFRS. The this unbalanced acceptance has the SEC under significant pressure to address the idea of quickly implementing a unified set of globally accepted standards in addition to the development of competitive exchange markets. Nonetheless, the idea of adopting IFRS originally came up in 2007 when the SEC decided to excluded a long-standing requirement by incorporating the use of IFRS to substitute certain GAAP requirements for corporations that were established in other countries. There is also the likelihood that the SEC may be attempting to increase its position in the global market by accruing power as the global regulator of corporate standards by delaying the implementation and leaning towards the idea of convergence. The Big Four, which was actually once known as the Big Eight prior to mergers, are all for the requirement for corporations to adhere to IFRS as it poses an opportunity for an thrust in the demand for financial consulting services and increased earnings. Thus, the question that must be answered is whether or not IFRS is truly better than the current GAAP system in place in the United States. The reality is that each country has historically had its own set of standards to which it adhered to. Some are better than others. For example, France has been said to have a weaker set of standards in comparison to that of the United States. Therefore, the IFRS would be better suited for a country with a weak set of standards to consider as it would be an immediate improvement and allow that country to be in the collective of those who already subscribe to IFRS. (www. deloitte. com) When one considers the cost-benefits associated with the use of IFRS in the United States they vary due to the variety of stakeholders involved. The reality is that costs have not been sufficiently quantified by the SEC, however, estimates state that the cost associated in conforming to these standards may range in the area of 1% 3% of an organizations total revenue. In addition, audits are more likely to incur a heavier costs in the future as there will only be so many parties trained to handle such matters as it is totally new to the industry on a whole. The cost will also affect educators as they scramble to develop curriculums and select ufficient literature to support the demands to produced knowledgable and qualified employees for the financial services market. The issue that many will face in the varied fields associated with IFRS is the challenge of shifting from a rules based system of financial accounting and reporting to a principles based system. The key to the successful recognition of the IFRS standards will be the goal of convergence. The reason many are willing to wait on subscribing IFRS in the U. S. Is the concern for the conflict of standards based on principles versus rules. The US GAAP standards are developed on specific rules, while the IFRS are strictly principles based. This means that IFRS are very limited. They seek out to provide the same results but the keys to doing so may result in different answers. This is where the convergence process will suffice in bringing all parties to a consensus on how to best apply the standards. The reality is that the US accounting industry and the global financial system ought to be fairly pleased with this open support, but investors, companies and firms continue to be in the dark on the exact date of this transition.

Biography of Hernando Pizarro - Hernan Pizarro Profile

Biography of Hernando Pizarro - Hernan Pizarro Profile Biography of Hernando Pizarro: Hernando Pizarro (ca. 1495-1578) was a Spanish conquistador and the brother of Francisco Pizarro. Hernando was one of five Pizarro brothers to journey to Peru in 1530, where they led the conquest of the mighty Inca Empire. Hernando was his brother Franciscos most important lieutenant and as such received a huge share of the profits from the conquest. After the conquest, he took part in the civil wars among the conquistadors and personally defeated and executed Diego de Almagro, for which he was later imprisoned in Spain. He was the only of the Pizarro brothers to reach old age, as the rest were executed, murdered or died on the battlefield. Journey to the New World: Hernando Pizarro was born sometime around 1495 in Extremadura, Spain, one of the children of Gonzalo Pizarro and Ines de Vargas: Hernando was the only legitimate Pizarro brother. When his elder brother Francisco returned to Spain in 1528 looking to recruit men for an expedition of conquest, Hernando swiftly joined up, along with his brothers Gonzalo and Juan and their illegitimate half-brother Francisco Martà ­n de Alcntara. Francisco had already made a name for himself in the New World and was one of the leading Spanish citizens of Panama: nevertheless, he dreamed of making a huge score like Hernn Cortà ©s had done in Mexico. The Capture of the Inca: The Pizarro brothers returned to the Americas, organized an expedition and departed from Panama in December of 1530. They disembarked on what is today the coast of Ecuador and began working their way south from there, all the while finding signs of a rich, powerful culture in the area. In November of 1532, they made their way inland to the town of Cajamarca, where the Spaniards caught a lucky break. The ruler of the Inca Empire, Atahualpa, had just defeated his brother Huascar in an Inca civil war and was in Cajamarca. The Spaniards persuaded Atahualpa to grant them an audience, where they betrayed and captured him on November 16, killing many of his men and servants in the process. The Temple of Pachacamac: With Atahualpa captive, the Spanish set out to loot the wealthy Inca Empire. Atahualpa agreed to an extravagant ransom, filling rooms in Cajamarca with gold and silver: natives from all over the Empire began bringing treasure by the ton. By now, Hernando was his brothers most trusted lieutenant: other lieutenants included Hernando de Soto and Sebastin de Benalczar. The Spaniards began to hear tales of great wealth at the Temple of Pachacamac, located not far from present-day Lima. Francisco Pizarro gave the job of finding it to Hernando: it took him and a handful of horsemen three weeks to get there and they were disappointed to find that there was not much gold in the temple. On the way back, Hernando convinced Chalcuchima, one of Atahualpas top generals, to accompany him back to Cajamarca: Chalcuchima was captured, ending a major threat to the Spanish. First Trip Back to Spain: By June of 1533, the Spaniards had acquired a massive fortune in gold and silver unlike anything seen before or since. The Spanish crown always took one fifth of all treasure found by conquistadors, so the Pizarros had to get a fortune halfway around the world. Hernando Pizarro was entrusted with the task. He left on June 13, 1533 and arrived in Spain on January 9, 1534. He was personally received by King Charles V, who awarded generous concessions to the Pizarro brothers. Some of the treasure had not yet been melted down and some original Inca artworks were put on public display for a while. Hernando recruited more conquistadors – an easy thing to do – and returned to Peru. The Civil Wars: Hernando continued to be his brothers most loyal supporter in the years that followed. The Pizarro brothers had a nasty falling-out with Diego de Almagro, who had been a major partner in the first expedition, over the division of loot and land. A civil war broke out between their supporters. In April of 1537, Almagro captured Cuzco and with it Hernando and Gonzalo Pizarro. Gonzalo escaped and Hernando was later released as part of negotiations to end the fighting. Once again, Francisco turned to Hernando, giving him a large force of Spanish conquistadors to defeat Almagro. At the Battle of Salinas on April 26, 1538, Hernando defeated Almagro and his supporters. After a hasty trial, Hernando shocked all of Spanish Peru by executing Almagro on July 8, 1538. Second Trip Back to Spain: In early 1539, Hernando once again departed for Spain in charge of a fortune in gold and silver for the crown. He didnt know it, but he would not return to Peru. When he arrived in Spain, supporters of Diego de Almagro convinced the King to imprison Hernando at la Mota castle in Medina del Campo. Meanwhile, Juan Pizarro had died in battle in 1536, and Francisco Pizarro and Francisco Martà ­n de Alcntara were murdered in Lima in 1541. When Gonzalo Pizarro was executed for treason against the Spanish crown in 1548, Hernando, still in prison, became the last surviving of the five brothers. Marriage and Retirement: Hernando lived like a prince in his prison: he was allowed to collect the rents from his considerable estates in Peru and people were free to come and see him. He even kept a longtime mistress. Hernando, who was executor of his brother Francisco’s will, kept most of the loot by marrying his own niece Francisca, Francisco’s only surviving child: they had five children. King Phillip II released Hernando in May of 1561: he had been imprisoned over 20 years. He and Francisca moved to the city of Trujillo, where he built a magnificent palace: today it is a museum. He died in 1578. Legacy of Hernando Pizarro: Hernando was an important figure in two major historical events in Peru: the conquest of the Inca Empire and the brutal civil wars among the greedy conquistadors that followed. As his brother Franciscos trusted right-hand man, Hernando helped the Pizarros become the most powerful family in the New World by 1540. He was considered the friendliest and most smooth-talking of the Pizarros: for this reason he was sent to the Spanish court to secure privileges for the Pizarro clan. He also tended to have better relationships with the native Peruvians than his brothers did: Manco Inca, a puppet ruler installed by the Spanish, trusted Hernando Pizarro, although he despised Gonzalo and Juan Pizarro. Later, in the the civil wars among the conquistadors, Hernando won the crucial victory against Diego de Almagro, thus defeating the greatest enemy of the Pizarro family. His execution of Almagro was probably ill-advised - the king had raised Almagro to nobleman status. Hernando paid for it, spending the best years of the rest of his life in prison. The Pizarro brothers are not remembered fondly in Peru: the fact that Hernando was probably the least cruel of the lot isnt saying much. The only statue of Hernando is a bust that he commissioned himself for his palace in Trujillo, Spain. Sources: Hemming, John. The Conquest of the Inca London: Pan Books, 2004 (original 1970). Patterson, Thomas C. The Inca Empire: The Formation and Disintegration of a Pre-Capitalist State.New York: Berg Publishers, 1991.