By: Evan, Kelsey, Adrian, Vivi, & Jordan 1. The Big Bang Approach The problem at hand: The Big Bang approach vs. Staggered Transition Our Decision: The.

By: Evan, Kelsey, Adrian, Vivi, & Jordan

1

The Big Bang Approach

The problem at hand:

The “Big Bang” approach vs. “Staggered Transition”

Our Decision:

The Big Bang approach is best method

Companies start accounting in accordance with IFRS beginning January 1, 2015

2

IFRS: Big and Small Business

Complete understanding by date of adoption

Principles = 2,500 pages (IFRS) vs. 25,000 pages (USGAAP)

Comparative statements: current and prior year only

Potential need for additional employees to convert 2014 financials during 2015

International understanding

Adoption regardless of company need

“...a single set of high-quality global standards.” – Arleen Thomas, AICPA

3

Big Bang: Big Business

Pros:

Consistent statements throughout quarters

Less hassle for businesses already engaging in international affairs

Less interaction with the SEC, the better

Cons:

For some companies, having to switch all at once might take away from their current tasks

No way to ensure that big businesses are going to be ready to convert under the big bang

4

Staggered Transition: Big Business

Pros:

Series of checkpoints to ensure progress

Less pressure and more confidence in transition to IFRS

Large companies can spend more time to become proficient in IFRS

Cons:

Inconsistent statements throughout quarters

Increases SEC interaction

More costly for the SEC to continually monitor conversion

5

Big Bang: Small Business

Pros:

Transition to IFRS for small and medium enterprises (SME’s)

Modified version of IFRS – less encompassing

Less costly

Less interaction with the SEC during transition phase

Cons:

Pressure and expectations with SEC

Unnecessary switch

6

Staggered Transition: Small Business

Pros:

Guidance throughout the process

Less confusion

Cons:

Transition period will yield inconsistency for business owners

Difficult for SME’s to meet demanding checkpoints

“Babysitting Effect”

Unnecessary switch

7

PwC: Big Bang and Staggered

Overall effects on PwC should not vary much between approaches

Training is in accordance with PwC’s schedule

Staggered transition, PwC will need to teach employees in concert with the SEC checkpoints

Opportunity to increase revenue through training companies

Ernst & Young significantly aided Coca-Cola in implementing IFRS

Cost to teach additional employees vs. future revenue increase

8

Big Bang Time Line

Implement IFRS standards beginning January 1, 2015

Issue 10-Q statements for 2015, supplemented with quarterly figures from 2014, all of which are in accordance with IFRS

9

present 01/01/2016

01/01/2014

Prepare for Big Bang (IFRS)

01/01/2015

Q1-15 Q2-15

Q3-15

10Q filings, also including 2004 quarterly figures, in accordance with IFRS

Other Factors Supporting Time Line

Investor knowledge of IFRS

Substantial time needed for investors to become fluent in IFRS

Investors need to fully understand IFRS before it is implemented

Initial Public Offerings

SEC currently requires five years of audited historical financial

Adjusted IPO deadline

Time needed to adjust legal contracts

10

Questions?

11

By: Evan, Kelsey, Adrian, Vivi, & Jordan

present 01/01/2016

01/01/2014

Prepare for Big Bang (IFRS)

01/01/2015

Q1-15

Q2-15

Q3-15

10Q filings, also including 2004 quarterly figures, in accordance with IFRS

Big Bang ApproachMore consistency among financial statements until date of adoption (01/01/2015)Less interacting with the SECNo way to ensure that companies will be ready for the transition on the Big Bang date

Staggered TransitionSeries of checkpoints to ensure participationIncreased interaction with the SECInconsistent financial statements during transition period

Effects on PwCLess variability of effects from two approachesOpportunity for increased revenue

Additional Support for Time LineInvestor knowledge of IFRSInitial Public OfferingsLegal documents