IFRS Overview and Update

1. IFRS Overview and Update Presented By: Wynne E. Baker, CPA, CBA, CFSA, CFF Member-in-Charge, Banking Industry Group KraftCPAs PLLC April 11, 2011

2. Economic Interconnectedness 2

3. How Significantly Has Globalization Affected Your Business in the Last Few Years? 3 3 Source: SmartBrief on Leadership poll, Aug. 4 (699 Respondents)

4. Global Growth in Emerging Economies 2005: 27 Fortune 500 based in BRIC 2010: 67 Source: Wall Street Journal and Money Magazine

5. Emerging Markets vs. Developed • Emerging markets • Population • Fast growing • Younger • High savings rates • No constraints of legacy systems • Liability underprotects • Education perceived as opportunity • Developed markets • Population • Slow-growing • Aging • Low savings rates • Legacy systems for technology • Liability overprotects • Education perceived as losing value 5

6. Facts About the IASB Independent, private-sector standard-setting body Housed in London 15 members from 9 countries Appointed by the International Accounting Standards Committee Foundation Trustees (Trustees) Funded primarily through the Trustees’ fundraising activities 6

7. Current US Structure Financial Accounting Foundation Financial Accounting Standards Board FASAC EITF US GAAP 7

8. The Structure of the International Accounting Standards Board 8

9. Constitutional Changes Establishment of a Monitoring Board Responsibilities Oversight of Trustees Review strategy Review operating procedures Ensure adequacy of financing agreements Selection of Trustees 9

10. Monitoring Board Members Monitoring Board of Capital Market Authorities Leaders from: U.S. Securities and Exchange Commission Emerging Markets Committee of IOSCO The Technical Committee of IOSCO Japan Financial Services Agency European Commission Basel Committee on Banking Supervision (Observer) 10

11. Constitutional Review Expanding the IASB Moving from an “Expert Model” to an “Geographical Model” 16 members Four from Asia/Oceania Four from Europe Four from North America One from Africa One from South America 2 others 11

12. Constitutional Review-Part 2 Proposals Published to Enhance Accountability and Stakeholder Outreach Agenda setting process Expand liaison with other organizations Procedure for accelerated due process Provide further geographical balance among Trustees Name changes: IFRS Foundation IFRS Board 12

13. IFRS - 122 of 195 Countries Permit/Require Permit or Require Working on Adoption 13 Source of information (adapted from): www.iasplus.com

14. SEC Proposed Roadmap Comment Period Closed 14

15. SEC Roadmap Key Milestones Improvements in accounting standards Significant progress on the September 2008 MoU Accountability and funding of IASC Foundation Secure and stable funding, to permit independence Broad based and compulsory Governance – Monitoring Board Interactive Data Education and Training 15

16. Proposed Roadmap Staging Large accelerated filers—December 15, 2014 ($700 million or more market cap) Accelerated filers—December 15, 2015 ($75 - $700 million market cap) All other—December 15, 2016 Early Use Alternative for 110 companies Improved comparability of financial statements Go No/Go Decision 2011 16

17. Reactions in Comment Letters Costs exceed the benefits Convergence is the preferred option Economic crisis sited as the rationale Convergence Over Adoption Consistency not guaranteed Accounting standards evolve to meet jurisdiction’s specific needs Timeline IASB Funding and Independence 17

18. Fall Survey: Should SEC Require Adoption? 18

19. IFRS Adoption Trends 19

20. IFRS – Adoption Trends • AICPA supports SEC Work Plan on transition to IFRS for public companies • FASB/IASB convergence project to be completed in 2011 20

21. Private Entity ReportingIFRS for SMEs 21

22. IFRS for SMEs IFRS for Small and Medium-sized Entities July 2009 Available for use by U.S. companies Based on full IFRS, but simplified Self contained What is a SME? Do not have public accountability and issue general purpose financial statements 22

23. Private Entity Options If SEC Mandates IFRS 23

24. Survey: Should Self Contained Standards Be Available for Private Companies? 24

25. Current Projects – By 2011 Financial instruments Fair Value Measurement Derecognition Revenue Recognition Financial statement presentation Leases Liabilities and equity distinctions Consolidations Post-employment benefits 25

26. IFRS Examples of Differences between IFRS and U.S. GAAP

27. Property, Plant & Equipment IFRS US GAAP Revaluation Not permitted Depreciation Component depreciation permitted Interest costs Apply interest rate(s) to average amount of expenditures Exchange differences not included • Revaluation • Permitted • Depreciation • Component depreciation required • Borrowing costs • Actual borrowing costs • Exchange differences included 27

28. IFRS Developments

29. IFRS – 2011 Is Critical Year 29

30. SEC at AICPA SEC-PCAOB Conference 30

31. Members’ IFRS Learning Trend Continues • Oct. 2008 • 26% report some knowledge • 30% say no familiarity • Sept. 2010 • 33% report some knowledge • 15% say no familiarity 31

32. Changes at the IASB • The Tweedie legacy: • Retires June 2011 • On U.S. progress: “The message has been ‘do you want these standards or not and, if you don’t, why should you have a major say in developing them.’” • New leadership named • Hans Hoogervorst named IASB chair • Ian Mackintosh named vice chair 32

33. Shifting Ground at FASB 33

34. Worldwide Regulation -- G20 and Basel 34

35. Questions? Wynne E. Baker KraftCPAs PLLC (615) 782-4230 wbaker@kraftcpas.com