financial structure, management, and ifrs reporting creating value for growth

Financial structure, management, and IFRS ReportingCreating value for growth

Presenter:

John Robinson

Partner

© 2013. For information, contact Deloitte Touche Tohmatsu Limited.

Contents

Financial management for large Infrastructure

entities

Decision making mechanisms

IFRS Reporting

3 Financial structure, management and reporting © 2013. For information, contact Deloitte Touche Tohmatsu Limited.

Financial Management for large infrastructure entities

Financial structure, management and reporting4 © 2013 ZAO Deloitte & Touche CIS or © 2013 Deloitte & Touche Regional Consulting Services Limited

Financial management for large infrastructure entitiesCreating the perfect balance

Site management/ Inventory store

HR (payroll &

subcontracting)

Legal

Financial Reporting

Engineers (Certification of works done, costs to

complete)

Fixed Asset management (Allocation of depreciation)Treasury

(interest treatment)

5 Financial structure, management and reporting r © 2013. For information, contact Deloitte Touche Tohmatsu Limited.

Decision making mechanism


Decision making mechanismFocusing on your priorities

Management information systems are the basis of sound decision making in financial management

© 2013 ZAO Deloitte & Touche CIS or © 2013 Deloitte & Touche Regional Consulting Services Limited

Decision making mechanism

7 Financial structure, management and reporting

Periodic internal financial reporting

Development of budgets and forecasts

Internal control environment

Features of a sound financial management system


Decision making mechanism (cont’d)Benefits of effective systems for decision making


Timely identification

important financial trends over a period of

time

Ability to correctly assess

the financial position and result of the

company

Attractiveness to investors

Improved ability to project future

results and growth potential

9 Financial structure, management and reporting © 2013. For information, contact Deloitte Touche Tohmatsu Limited.

IFRS reporting


IFRS ReportingBringing trust and integrity to the market• In some respects

implementing IFRS needs to be seen as a fundamental change in attitude as to how management looks at its Management Information Systems

• IFRS reporting is not simply the annual transformation process from local accounting to a set of IFRS compliant Financial Statements.


IFRS Reporting (cont’d)

Entities continue to operate their financial reporting from a tax perspective rather than from a business perspective. Tax should be an outcome rather than a driver of business

Implementing IFRS is a process that requires change and the ongoing operations require people to change the way that they work on a day to day basis

Companies in transition economies, like Azerbaijan, typically change very little in terms of their day to day operations when implementing IFRS and rely on a periodic transformation exercise of the “IFRS reporting” department to do the work. As a result they struggle to get timely, relevant information and are very reliant on 1 or 2 people in the organisation to get the information together. This has its own risk when these people are in high demand and it is easy for the company’s “history” to be lost when these people change employment.


Typical conversion impacts


Activities

Accounting and reporting Taxes

• Identify local GAAP/IFRS differences (accounting, presentation, and disclosure) and identify high-level impact on the entities consolidated financial statements

• Analyze optional IFRS policies and first-time (IFRS 1) considerations and implications of anticipated future changes to IFRS standards

• Analyze peer company IFRS 1 and accounting policy elections

• Identify local tax accounting method issues resulting from accounting workstreams

• Consider IFRS as a basis for local country tax reporting

• Identify process and technology issues the tax department may face in connection with transition to IFRS

• Assess high-level global tax planning implications


Typical conversion impacts (cont’d)


Activities

Support for local statutory conversion People and organization

• Identify statutory reporting requirements and prioritize statutory locations for IFRS conversion or reconciliations from statutory GAAP to IFRS

• Analyze impacts on the overall organization, including the following areas:

• Change management strategy and plan (including HR matters such as training and communication strategies)

• Legal – Identify certain arrangements with local GAAP metrics

• Analyze other organizational impacts

Systems, processes, and controls Workplan development and communications

• Perform initial analysis of required financial applications and technical infrastructure

• Identify high-level system gaps to meet future IFRS reporting requirements

• Summarize assessment findings and assist management with developing a strategic workplan and roadmap for its global IFRS implementation including:

• Critical activities, timelines, resource estimates, budget estimates, coordination with auditors, etc.

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financial structure, management, and ifrs reporting creating value for growth

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