• IFRS eligibility status*• IFRS adoption/deployment

options

• Data gathering needs

• Key accounting and tax

policy differences*• Current state systems,

interfaces, and reporting capabilities

• Supporting business processes

• Organizational change readiness

• Existing employee skills set and training needs

• Key stakeholder needs

• Employee compensation tied to performance metrics

• Internal and external communications needs

• Executive leadership support

• Long-term contracts

• IFRS adoption strategy

• IFRS deployment plan

• Accounting policy

revisions*• Internal accounting

controls*• Technical architecture

design for GAAP to IFRS strategy

• Common IFRS data model

• Business process changes based on new requirements

• Internal/external communication strategy

• Employee performance metrics aligned with IFRS

• Training program

• Ongoing IFRS compliance

plan*

• Accounting systems and data conversion

• Financial reporting and internal accounting controls

• Supporting business processes

• Financial statement

restatement*• Regulatory and statutory

reporting (finance & tax)

• Organizational structure and performance measurement system

• 3rd party contracts to correspond with new reporting metrics

• Training, work-shadowing,

and skills assessment*• Communications plan

Phase IAssess

Phase IIPlan and Design

Phase IIIBuild and Test

Phase IVDeploy

• Accounting and sub-systems per deployment strategy

• Internal controls*• Business processes to

locations

• Regulatory reporting capability

• Performance measurement targets

• Organizational structure

• IFRS compliant financial

statements*• Footnote and disclosures*

• IFRS compliance updates*

Each phase of the IFRS conversion reflects a comprehensive set of activities to be considered and acted upon.

Change Management (communication, training, user readiness, sponsorship)

3 – 6 months

10 – 12 months

TBD

Program and Journey Management

LegendProject Checkpoint=

*

Conversion Approach

Accounting Policy Assessment and Determination for Opening Balance Sheet*

10 – 12 weeks

= Accounting Firm Activity

Key Impact areas

Impact due to IFRS implementation varies based on the GAAP which is presently being followed. Some of the commonly noticed key impact areas are

Impairment of Assets

Property, Plant &

Equipment

Intangible Assets

Inventory Valuation

Revenue Recognition

Accounting for Financial Instruments

Key Impact Areas –Impairment of Assets (IAS 36)

Cash Flows from asset determine the need for impairment

Impairment losses cannot be revised or reversed

Current Situation Carrying value

versus the “Fair Value” of the asset determine the need for impairment

IFRS allows impairment losses to be reversed or revised

Situation under IFRS

SAP Solution

Create a separate

depreciation area to track impairments

to assets.

Recording and

reporting of Impairment separately

from original APC

Use “Investment

Support” functionality

in SAP

Integration with parallel

GAAP accounting.

Multiple Solutions available for IFRS Accounting

There are 4 key implementation options available when adopting IFRS

Option 1: Additional Company Code (Classic GL) An additional company code as well as accounts are created to capture IFRS postings

One or more special purpose ledgers may be required

Additional configuration is required to support foreign exchange valuations, new financial statement versions, asset accounting, etc.

Option 2: Parallel Accounting with Special Purpose Ledger (Classic GL) One or more special purpose ledgers are required

Additional accounts are created to capture IFRS postings

Option 3: Parallel Accounting with Additional Accounts (Classic GL) Additional accounts are created to capture IFRS postings

A set of common accounts, US GAAP accounts, local GAAP accounts, as well as IFRS accounts will be setup and maintained

Option 4: Parallel Ledger (New GL) A separate ledger will be created in order to capture IFRS postings and maintain a

complete set of IFRS books

The IFRS ledger is posted to in parallel with US GAAP and other regulatory ledgers

New G/L Solution for Parallel Accounting

FI-ARFI-AP…SDMMPPPM…

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New General Ledger

0L Leading Ledger

Non Leading Ledger

Non Leading Ledger

Other Non Leading Ledgers

Postings via new transactions FB01L and FB50L

Foreign currency Valuation Program FAGL_FC_VALUATION

FI-AA depreciation areas

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IFRS, US GAAP, Local GAAP Reports are based on the corresponding ledger

SAP’s New General Ledger Accounting enables the use of Parallel Ledger accounting as a method to achieve Multi-GAAP accounting

IFRS is an Accounting Framework that is fast getting mandated by countries around the world.

Deploying IFRS has challenges as well as opportunities to improve the accounting process.

There are a number of IFRS requirements, solutions for which will need to be built into SAP systems.

SAP provides a number of options to deal with Parallel Accounting, including Parallel Ledgers which is introduced in the ECC versions.

Unique transition challenges are likely to be faced by customers (especially in US). The transition to IFRS is an important project and needs to be planned out well in advance.

Summary