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IFRS: Coming To A CPA Exam Near You

Think of International Financial Reporting Standards (IFRS) as the set of standards for international accounting practices which were codified and adopted by the International Accounting Standards Board (IASB).

Actually, there is a set of standards which predates IFRS. From 1973-2001, the International Accounting Standards Committee (IASC) issued a series of International Accounting Standards (IAS) by which accounting was conducted.

On April 1, 2001, the International Accounting Standards Board (IASB) took over the duty of promulgating the International Accounting Standards from the IASC. Soon after that, the International Accounting Standards Board combined the existing IAS and SICs and called the new set of standards International Financial Reporting Standards (IFRS).

As of May 2010, all of the United States' major trading partners and about 100 other nations have implemented or are committed to implementing International Financial Reporting Standards (IFRS). The International Federation of Accountants' standard setting boards have developed international ethics standards and international auditing and assurance standards which are used by almost 100 nations.

To make sure that U.S. Certified Public Accountants (CPAs) have at least a basic understanding of IFRS, the American Institute of Certified Public Accountants Board of Examiners (AICPA BofE) is merging questions on IFRS into three sections of the CPA Exam starting in January 2011. (Regulations will not have IFRS questions.)

The AICPA Board of Examiners has stated that it expects that those taking the 2011 CPA Exam will be able to demonstrate the same level of competence on Generally Accepted Accounting Practices in the United States (U.S. GAAP) and United States Generally Accepted Auditing Standards (U.S. GAAS) as they do on IFRS. The Board has not released how many questions it expects to ask on IFRS nor on how they will be weighed.

Currently, there are US companies with overseas offices and overseas companies with offices in the US. With each passing day, the economies of the world's nations become more interconnected. The AICPA Board of Examiners wants CPAs to be prepared to function successfully within the framework of IFRS, even before the US Securities and Exchange Commission (SEC) requires US companies to file reports according to IFRS.

The AICPA Board of Examiners will test on IFRS in the Auditing and Attestation (AUD), Business Environment and Concepts (BEC), and the Financial Accounting and Reporting (FAR) sections of the CPA Exam. It is likely that questions will focus on how US GAAP differs from IFRS. Once the AICPA BofE is confident that candidates understand this segment, questions on other aspects of IFRS will be revealed on the CPA Exam. If the SEC decides to require IFRS, that will speed up the inclusion of IFRS content on the exam.

Why International Financial Reporting Standards (IFRS) Will Not Be in Regulations (REG) in Early 2011 The American Institute of Certified Public Accountants (AICPA) continues to reveal hints on what changes will be made to the CPA Exam starting in January 2011 but they are doing so by using indefinite terms. AICPA uses terminology such as "another possible topic will be" and "students may be asked" to indicate topics which have the greatest chance of being introduced. You may wish to study those topics just in case they show up on your 2011 exam.

There is an interesting change to what we thought you were going to be tested on: there will be no questions on IFRS in REG for at least the early part of 2011. Why? No one has been able to estimate how taxes will be affected by the way in which US corporations use IFRS. Heads up! Once this issue is settled, to the satisfaction of AICPA, questions on IFRS will be merged into REG in 2011.

As of May 2010, it is likely that these topics will appear magically on the 2011 CPA Exam.

Auditing & Attestation (AUD) * Do you understand how the AICPA Codification of Statements on Auditing Standards, AU Appendix B, Analysis of International Standards on Auditing applies to business? * Do you know what role the International Auditing and Assurance Board (IAASB) will play in establishing International Standards on Auditing (ISA)? * Do you know what differentiates ISA and U.S. Auditing Standards? * Do you know what role the International Ethics Standards Board for Accountants (IESBA) will play in establishing requirements for the Code of Ethics for Professional Accountants of the International Federation of Accountants (IFAC)? * Replace the one long simulation in the current format with several short Task-Based Simulations (TBS) in 2011. * Double the weight of Simulations from 20% in 2010 to 40% in 2011. * Add one new research task format. * Delete Written Communications. Business Environment & Concepts (BEC) * Do you understand the possible effects of globalization on the business environment? * Can you explain the underlying economic substance of transactions? * Add Written Communications, which will be 15% of your score. * Delete 18 Multiple Choice Questions (MCQ) or 15%. * Delete some of the content on IT. * Add questions on project management.

Financial Accounting & Reporting (FAR) * What are the differences between financial statements which are prepared using generally accepted accounting principals (GAAP) standards vs. those that are prepared using IFRS? * Can you explain how the first-time integration of IFRS standards will affect financial reporting, disclosures and presentation? * Replace the one long simulation in the current format with several short Task-Based Simulations (TBS). * Double the weight of Simulations from 20% in 2010 to 40% in 2011. * Add one new research task format. * Delete Written Communications. Regulation (REG) * Replace the one long simulation in the current format with several short Task-Based Simulations (TBS). * Double the weight of Simulations from 20% in 2010 to 40% in 2011. * Add one new research task format. * Delete Written Communications. * Delete 18 Multiple Choice Questions (MCQ) from BEC and REG;

Article Source: http://articlebarracks.com

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