@iiachicago #iiachi ifrs impact on internal audit seminar presentations/b1... · 2012 2013 2014...

IIA Chicago Chapter 53rd Annual SeminarApril 15, 2013, Donald E. Stephens Convention Center

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IFRS Impact on Internal Audit

Debra R. Hopkins

President, Hopkins CPA Knowledge

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April 15, 2013 IIA Chicago Chapter 53rd Annual Seminar 2

• Explore the use of IFRS in today’s reporting arena

• Identify what IFRS consists of

• Review major technical differences

• Discuss the IA’s preparedness strategy

• Provide tips to avoid common conversion mistakes

• Resources

Session Objectives

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• Nonissuer entities

• Issuer entities – foreign issuers

• IFRS for SMEs

Who Uses IFRS?

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Does your entity currently use IFRS?

• If not, have they considered using IFRS?

• If so, what type of entity?

– Foreign subsidiaries

– U.S. based entity

– Other

Audience Polling Question #1

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International GAAP

IAS SICs IFRS IFRICs

The Standards include. . . . . . .

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• FASB works with IASB

• Local GAAP differences

• Over 120 nations have adopted IFRS

• Is U.S. GAAP the “gold” standard?

• Newly created “Accounting Standards Advisory Forum”

Convergence, Harmonization, or Scrap It!

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How involved are you in auditing your entity’s financial reporting accounting process?

– None

– Somewhat • Annual audit area • Review annual report financials

– Considerably• Review monthly reports• Annual audit area• Involved with implementation of new accounting standards


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• Form of financial statements?

• Comparison to current applicable financial reporting framework

• “Principles based” = more disclosures; more choices

• Manage conversion risks

• Financial statement analysis

Major Technical Challenges

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• No use of LIFO

• Impairment, one step test

• Many choices in financial statement presentation

• Development costs – capitalize

• Inventory – Lower cost or replacement cost

• Component depreciation

• Revaluation or cost model

• More Choices; Less Rules; Less Industry Guidance

Major Technical Differences

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How technically savvy is your IA staff?

• CIA

– CIA special designation

• CPA

• No training in IFRS

• Some training in IFRS

• Comfortable with IFRS


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• Planning for IFRS Implementation

• Technical Knowledge

• Conversion Costs

• Educate – What are the Benefits?

• Manage Risk

• Rewards for those who Do?

– Project

– Ongoing

Internal Audit Challenges

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• Eliminate barriers to cross border funding

• Improve ability to compete in global marketplace –suppliers, customers, competitors

• Centralize business operations

• Standardize internal controls over financial reporting

• Enhance comparability of financial results – create a common platform

• Other benefits. . . . . . .

Benefits of Using IFRS

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Think “Enterprise Risk Management”

• Affects IT system

• Affects performance matrices

• Affects internal controls

• Affects the IA budget and audit plan

• Affects the Audit Committee

• Affects the Audit Charter

• Affects creditors, suppliers, customers

Avoid Headaches

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• Begin Early – Years ahead of time

• IA Involvement before implementation

• Make your financial statement presentation choices before implementation

• Study others – learn about IT systems that worked

• Get your external audit firm involved –remember the financial statements are yours

• Obtain the right people

Conversion Tips

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• 3 Statements of Financial Position

• 2 Statements of Comprehensive Income

• 2 separate Income Statements (if presented)

• 2 Statements of Cash Flows

• 2 Statements of Changes in Equity

IAS No. 1 Revised First IFRS Reporting Period Must Present

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First IFRS Reporting Period

2012 2013 2014

Restate 2012Using IFRS in place

at 2014

Restate 2013Using IFRS in place

at 2014

First IFRS Reporting Period

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What is holding the U.S. back from embracing IFRS?


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• www.IFRS.com• www.IASB.com

– International Financial Reporting Standards (Red Book)

• AICPA – IFRS Certification• AICPA – www.cpa2biz

– IFRS Financial Statements Best Practices in Presentation and Disclosures

• Big Four websites• Your external audit firm• Questions email: [email protected] or phone 815-

764-9195

Current Resources

http://www.ifrs.com/

http://www.iasb.com/

http://www.cpa2biz/

mailto:[email protected]

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@iiachicago #iiachi ifrs impact on internal audit seminar presentations/b1... · 2012 2013 2014...

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