Click to edit Master Click to edit Master title style title style !@# Casualty Actuarial Society – San Diego, CA September 10 – 11, 2007 www.ey.com/us/actuarial INSURANCE AND ACTUARIAL ADVISORY SERVICES International Accounting – Emerging International Accounting – Emerging Issues Issues Thomas Le Thomas Le
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Click to edit Master title style !@# Casualty Actuarial Society – San Diego, CA September 10 – 11, 2007 INSURANCE AND ACTUARIAL.
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Casualty Actuarial Society – San Diego, CA September 10 – 11, 2007 www.ey.com/us/actuarial
INSURANCE AND ACTUARIAL ADVISORY SERVICES
International Accounting – Emerging IssuesInternational Accounting – Emerging Issues
International Accounting – Emerging IssuesConvergence
In February 2006, FASB and IASB jointly issued a memorandum of understanding, agreeing to identify and eliminate major differences in certain specified areas by 2008
FASB 159 was in part based on the principles of IAS 39
International Accounting – Emerging IssuesConflict U.S. issuer reporting under IFRS would still be
required to apply all SEC rules and regulations SEC generally requires that “push-down”
accounting be applied whenever separate financial information is presented in a filing for a “substantially wholly-owned” purchased subsidiary. This may conflict with IFRS
U.S. issuers may need to pre-clear the accounting with the SEC before filing IFRS financial statements
In 2005, the Committee of European Securities Regulators (CESR) concluded that U.S. GAAP was “equivalent” to IFRS
Proposal would still require U.S. issuers to identify all IFRS/U.S. GAAP differences and disclose relevant and material differences (now deferred to 1/1/09)
International Accounting – Emerging IssuesDifferences
Impairment model: U.S. GAAP recognizes only if carrying cost falls below both undiscounted cash flow and fair value (two-step test), while IFRS compares the carrying cost to the higher of fair value or value in use (one-step test)
Under IFRS, convertible debt must be bifurcated between debt and equity, while under U.S. GAAP such debt is usually recognized entirely as a liability