Ifrs Usgaap

Audit

IFRSs and US GAAP
A pocket comparison
March 2007

An IAS Plus guide

Audit Tax Consulting Financial Advisory

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Contacts
Global IFRS leadership team
IFRS global office Global IFRS leader Ken Wild kwild@deloitte.co.uk IFRS centres of excellence Americas D.J. Gannon iasplusamericas@deloitte.com Asia-Pacific Hong Kong Stephen Taylor iasplus@deloitte.com.hkEurope-Africa Johannesburg Graeme Berry iasplus@deloitte.co.za Copenhagen Jan Peter Larsen dk_iasplus@deloitte.dk London Veronica Poole iasplus@deloitte.co.uk Paris Laurence Rivat iasplus@deloitte.fr Melbourne Bruce Porter iasplus@deloitte.com.au

Deloitte’s www.iasplus.com website provides comprehensive information about international financial reporting in general and IASB activities in particular.Unique features include: • daily news about financial reporting globally. • summaries of all Standards, Interpretations and proposals. • many IFRS-related publications available for download. • model IFRS financial statements and disclosure checklists. • an electronic library of several hundred IFRS resources. • all Deloitte Touche Tohmatsu comment letters to the IASB. • links to nearly 200IFRS-related websites. • e-learning modules for each IAS and IFRS – at no charge. • complete history of adoption of IFRSs in Europe and information about adoptions of IFRSs elsewhere around the world. • updates on developments in national accounting standards.

IFRSs and US GAAP The path to convergence
The Norwalk agreement
In October 2002, following a joint meeting at the offices of the US FinancialAccounting Standards Board (FASB) in Norwalk, Connecticut, the FASB and the International Accounting Standards Board (IASB) formalised their commitment to the convergence of generally accepted accounting principles in the United States (US GAAP) and International Financial Reporting Standards (IFRSs) by issuing a memorandum of understanding (commonly referred to as ‘the Norwalk agreement’). Thetwo Boards pledged to use their best efforts to: • make their existing financial reporting standards fully compatible as soon as is practicable; and • coordinate their future work programmes to ensure that once achieved, compatibility is maintained. “Compatible” does not mean word-for-word identical standards, but rather means that there are no significant differences between the two sets ofstandards.

Road map for convergence 2006-2008
In February 2006, the IASB and the FASB released a ‘roadmap’ which identified short- and long-term convergence projects. Short-term projects For the projects identified as short-term, the goal by 2008 is to reach a conclusion about whether major differences in those few focussed areas should be eliminated through one or more short-term standard-setttingprojects and, if so, to complete or substantially complete work in those areas. These topics for short-term convergence include: IASB • Borrowing costs (remove expense option) • Joint ventures (remove proportionate consolidation option for jointly controlled entities and clarify definition) FASB • Fair value option for financial instruments (issued as FAS 159 in February 2007) • Investmentproperties • Research and development • Subsequent events
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The path to convergence

Joint • Impairment • Income taxes Long-term projects The goal for 2008 for the projects listed below is to have made significant progress in the following areas identified for improvement: • Business combinations • Conceptual framework • Fair value measurement guidance (FAS 157 used by IASB as basis for DiscussionPaper) • Financial statement presentation • Post-retirement benefits • Revenue recognition • Liabilities and equity • Financial instruments • Derecognition • Consolidations and Special Purpose Entities • Intangible assets • Leases More specific goals have been set for each individual project. The objective is to provide a timeframe for convergence efforts in the context of both the objective of...