Transcript EY Case Competition Powerpoint

Ernst & Young
Case
Competition
Casey Gattshall, Will Huskinson, David
Ayala, Mike Floeck, and Kevin Vo
Facts
• Farrlandia Accounting Regulatory Board (FARB) has
required the adoption of IFRS from GAAP
• Marshall Industries has little experience with IFRS
• Voluntary adoption - Jan 1, 2014
• Mandatory adoption - Jan 1, 2016
Problem
• Early adoption vs. mandatory adoption
• Identify the implications
• Two or three key ongoing differences between
GAAP and IFRS
• Two key exemptions and exceptions under IFRS-1
Unknowns
• How much is Marshall willing to spend to be ready
by the grace period?
• How much will Marshall need to spent on training
employees, implementing IT systems, etc.?
• How easy can staff adapt to IFRS?
Assumptions
• Competency of staff
• Client is willing to adopt IFRS early if it is the best
option
Solution
• Wait until mandatory adoption on January 1, 2016.
Reasons
• Time to prepare employees and implement IT
support
• Communication of conversion to shareholders and
potential shareholders
• Help reduce long term costs
Implications
• System- significant overhaul of IT systems
• People- majority of employees unaffected;
accountants and IT department will have lots of
work to prepare for switch
• Business- operations relatively unchanged
Key Differences
• GAAP = rules based standard
• IFRS = principles based standard
• Many differences PP&E depreciation and
inventories most important
• PP&E significant component depreciation
• Inventories
IFRS-1 Key Exemptions
and Exceptions
• PP&E: choice of valuation method
• AROs: measurement at date of transition rather
than recalculation