badm 559 - ifrs adoption

7/28/2019 Badm 559 - Ifrs Adoption

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IFRS Adoption Compliance

Issues

Elaine Lau

December 15, 2008


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Why IFRS?

International Financial Reporting Standards Globally accepted accounting standards and

interpretations

Adopted by over 100 countries including the EU

Early adoption of IFRS at end of 2009 110 largest publically held companies in the U.S.

SEC agreed to a roadmap that may lead to all U.S

companies adopting IFRS by 2014 SEC to determine this mandate in 2011

Seven milestones will influence decision


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Key Impacts of IFRS

Adjustments to financial reporting systems,existing interfaces and underlying databases

General Ledger and chart of account structure

Including performance metrics

Global consolidation

Sub-system issues related to configuration and

data capture Capabilities to manage multiple GAAP accounting

during transition


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Types of changes

New data requirements

Selection &

implementation of new

system Reconfiguration of

existing systems

Interface and mappingchanges

Modifications to

existing systems

Consolidations of

entities Reporting packs

Financial reporting tools

Changes to chart ofaccounts


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European Experience Lessons

Effort was often underestimated

Misconception of sole accounting issue

Projects often lacked holistic approach No consideration for collateral effects (e.g.: IT)

Late start often resulted in escalation of costs

Many did not achieve business as usualstate for IFRS reporting


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IFRS in the UK

Financial statements on average 50% longer

Challenging Issues

New disclosures in complex areas

Valuation of financial instruments & intangible assets

Accounting for deferred tax

Pension deficits on B/S

Disclose key valuation assumptions

Share-based payment expense on I/S

Need to use sophisticated option valuation models


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IT Conversion Effort

Time, complexity and cost may differ for eachtopic based on company-specific circumstances

Advisors/Consultants may help Protiviti PwC, KMPG, Deloitte, and Ernst & Young

Possible Software Solutions SAP Accounting for Financial Instruments

FERNBACHs FlexFinance IFRS

CaseWare IFRS module

Microsoft Dynamics AX


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Conclusion

Like the Sarbanes-Oxley Act before it, IFRS will

significantly impact IT departments

How to plan a smooth IFRS adoption Important to plan early

Set the tone at the top for solid foundation

Include heads of IT departments right at thebeginning

Understand the differences between U.S. GAAP

and IFRS will translate to technical specifications

badm 559 - ifrs adoption

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