Presentation Transcript

1. Introduction to International Financial Reporting Standards (IFRS) in Mexico

   Ubaldo Wilson Audit manager Deloitte - Tijuana Breakfastmeeting October 17, 2012
2. Introduction to International Financial Reporting Standards (IFRS). Evolution form IASC-IASB: Review existing IFRS standards Review new IFRS standards that are not yet effective Identify impacts of adopting IFRS from Mexican Financial Reporting Standards (MFRS). Describe IFRS 1: First-time Adoption of IFRS Objectives Introduction to International Financial Reporting Standards
3. No plans or unknown Developing plans to adopt Adopted or will adopt Worldwide IFRS adoption map — For public companies Canada 2009*/2011 Europe 2005 United States ? Japan2010*/2015 ? Mexico 2008-12 India 2011 Brazil 2010 Australia 2005 Chile 2009 Argentina 2012 South Africa 2005 Global use — Used in over 120 countries by more than 40% of the Global Fortune 500 Current: European Union (“EU”) countries, Hong Kong, Australia, New Zealand, many Middle East and South American countries and Japanese early adopters Future: Argentina and Mexico Potential : U.S. Introduction to International Financial Reporting Standards
4. What is IFRS? IFRS is a set of established accounting standards that is rapidly gaining worldwide acceptance Standards are promulgated by the International Standards Board (IASB) IASB includes representatives from major countries, including the U.S. Generally more focused on objectives and principles and less reliant on detailed rules and interpretations than U.S. GAAP IFRS currently consists of a single volume of approximately 40 standards and 30 interpretations Standards include IASs and IFRSs Interpretations include SICs and IFRICs Introduction to International Financial Reporting Standards
5. Evolution form IASC-IASB IASC (1973) International Accounting Standards Committee IASB (2001) International Accounting Standards Board IFRS International Financial Reporting Standards IAS International Accounting Standards SIC Standing Interpretations Committee IFRIC International Financial Reporting Interpretations Committee Introduction to International Financial Reporting Standards
6. IFRS/IAS IFRIC / SIC Appendices not forming part of IFRS Implementation guidance not forming part of IFRS Framework Other std. setters IFRS Hierarchy IFRS hierarchy for selecting accounting policies 6 Introduction to International Financial Reporting Standards
7. Structure of IFRSPrinciples-based standards 13 IFRS International Financial Reporting Standards 29 IAS International Accounting Standards Standards (Level A) Interpretations (Level B) 18 IFRIC International Financial Reporting Interpretations Committee 6 SIC Standing Interpretations Committee Introduction to International Financial Reporting Standards
8. IFRS Checklist Introduction to International Financial Reporting Standards 8
9. IFRS Checklist Introduction to International Financial Reporting Standards 9
10. Importance of IFRS in MexicoBulletin A-8, Supplemental Introduction to International Financial Reporting Standards
11. Importance of IFRS in MexicoAdoption of IFRS by Mexico Public Companies and Securities Market Participants Introduction to International Financial Reporting Standards
12. Importance of IFRS in MexicoIFRS Financial Statements for 2012 (Example) Last MFRS financial statements First IFRS financial statements Comparative period First period of IFRS financial reporting Retrospective application of IFRS in effect as of December 31, 2012 Evaluation of significant impacts: Strategic implementation “Roadmap” to identify changes to: Financial information Processes and internal controls Interim IFRS financial statements Comparative interim IFRS reporting Transition date - Opening IFRS balance sheet Reporting date - Annual IFRS financial statements 12 Introduction to International Financial Reporting Standards
13. IFRS 1 IFRS 1 Overview and Scope IFRS 1 provides guidance on first-time application of IFRS (subsequent accounting policy elections and prospective accounting addressed under other standards) Applies when an entity makes its first “explicit and unreserved” reference to IFRS Generally requires retrospective application of all IFRS standards effective at the end of the first IFRS reporting period (provides for some elective and mandatory exceptions) Requires one year of comparative financial information Transition adjustments recognized in retained earnings Disclosures and reconciliation to prior GAAP to explain transition effects Primary objectives: Consistent starting point for IFRS Specific requirements and detailed disclosures Clearly convey to financial statement users the impact of converting from previous GAAP (MFRS) to IFRS 13 Introduction to International Financial Reporting Standards
14. IFRS 1 IFRS 1 – First-time application of IFRS Summary The first FE under IFRS are those which are adopted IFRS, by an explicit and unreserved statement of compliance with them. The FE must comply with each IFRS at the reporting date. Make an initial balance sheet at the date of transition. Include disclosures of transition effects. An entity shall apply IFRS 1: In the first FE under IFRS. Interim Financial Report - IAS 34, the period of the first FE under IFRS. Introduction to International Financial Reporting Standards
15. IFRS 1 Mandatory exceptions to retrospective application IFRS prohibits retrospective application of certain aspects of other IFRS. The detail shown below is contained in paragraphs 14 to 17 of IFRS 1 and Appendix B: Derecognition of financial assets and financial liabilities Generally, a first-time adopter shall apply the derecognition requirements of IAS 39 prospectively and would therefore not recognize items previously derecognized under local GAAP. The designation of hedge accounting cannot be made retroactively. If they were properly designated under previous GAAP and do not meet the IFRS criteria it must discontinue hedge accounting. Follow transition provisions in IAS 39 for hedging IFRS estimates at the date of transition to IFRSs shall be consistent with those made for the same date in accordance with previous GAAP (after adjustments to reflect differences in accounting policies), unless there is objective evidence that those estimates were in error. Use of estimates Certain requirements to apply IAS 27 prospectively from the date of transition (OCI distribution, changes in shareholdings that do not result in loss of control and loss of control over a subsidiary). Some aspects of accounting for non-controlling interests Introduction to International Financial Reporting Standards
16. IFRS 1 Optional exemptions from retrospectiveapplication May elect some or all of the following (does not impact future “accounting policy” choice, although your choices will impact financial results at the transition date): 16 Introduction to International Financial Reporting Standards