us gaap to ifrs
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TRANSCRIPT
issues&trendsA Kelly finAnciAl resources® report
All trademarks are property of their respective owners.Kelly Financial Resources, A Business Unit of Kelly Services
An Equal Opportunity Employer© 2008 Kelly Services, Inc. T2517 supply #1160 11/08
IntroductionFor years, the Securities and Exchange Commission (SEC) has advocated efforts to develop a single set of high-quality, global accounting standards. Thus it came as no surprise when the SEC unanimously voted on August 27, 2008 to issue a schedule of milestones that would ultimately lead U.S. public companies to the acceptance of the International Financial Reporting Standards (IFRS).
As a major initial step toward cross-border accounting standards, in 2002 the SEC announced its support of the Norwalk agreement, a memorandum of understanding between the U.S.-based accounting standard-setting body, the Financial Accounting Standards Board (FASB), and the London-based accounting standard-setting body,
the International Accounting Standards Board (IASB). The agreement essentially stated that the two groups would jointly develop accounting standards that could be used for domestic as well as international financial reporting.
The FASB and the IASB later established a plan to align the U.S. Generally Accepted Accounting Principles (GAAP) with the IFRS. The convergence would allow U.S. public companies to present financial statements under the same rules as foreign companies and standardize accounting standards across international subsidiaries. Aligning the two plans would likely facilitate capital formation in the U.S. and stimulate growth in today’s global economy.
From GAAP to IFrS:overcomInG StAFFInG chAllenGeS
and using IFRS, the company could identify the accounts that needed to be adjusted for compliance, evaluate the conversion’s impact on its existing financial, reporting and IT processes, and develop action plans to implement the new reporting system.
implementation c: Most European countries have adopted some version of IFRS. During Israel’s implementation of the standards, the country was required to report on their preparation activities as well as on the expected financial implications. The editor of The Accountant, a publication of the Institute of Certified Public Accountants in Israel, says that companies, auditors, analysts and banks will no doubt experience trying times as they adjust to the new language, but he also assures that it is worth it. Specifically, he estimates that the conversion will encourage more Israeli companies to list on U.S. exchanges, as they will be able to carry out flotations more easily and at a higher value, making it easier for them to raise capital.
To properly approach the migration to IFRS based on these global experiences, U.S. organizations should first evaluate how the implementation will potentially impact financial statements. By then reviewing the key differences between GAAP and IFRS, the company can develop a strategic plan with the help of experts in IFRS for compliance. In effect, the implementation optimizes reporting processes and increases business transparency to attract investors. At the same time, the company benefits from economic growth as foreign companies increasingly list securities in the U.S.
how companies Benefit from contract StaffingProfessionals versed in IFRS not only help companies circumvent prospective risks and costly disruptions to operations during conversion, but also provide expert management throughout the process. With contract staffing, companies temporarily acquire a supplemental team of financial professionals with independent expertise in areas such as valuation of contingencies, derivatives, and defined benefit plans—on a flexible cost structure, as opposed to hiring costly permanent staff.
These knowledgeable professionals can start as soon as necessary, avoiding downtime caused by transitioning existing staff to IFRS-dedicated efforts, and thereby facilitate the transition without disrupting normal operations. Of further benefit to the company, reputable contract personnel can provide extensive on-the-job training on IFRS procedures for various departments, on critical subjects such as the momentum-gaining eXtensible Business Reporting Language (XBRL), a technical language used to exchange business information, submit financial reports, and analyze corporate financial performance. The IASB’s XBRL Advisory Council (XAC) and Quality Review Team (XQRT) are currently driving the implementation of XBRL and IFRS through the use of XBRL.
“Through providers such as Kelly Financial Resources, U.S. companies can gain access to an international talent pool of professionals who have worked comprehensively with the IFRS-based accounting system,” says Gillan. These professionals have successfully helped other organizations make the transition cost-effectively.
conclusionThe conversion to IFRS from U.S. GAAP will greatly impact U.S. companies’ existing accounting policies for financial instruments, deferred tax, pensions, provisions, special-purpose entities, employee-share options, and more. To alleviate the many potential complexities and risks associated with the conversion, companies need to dedicate staff to the project. With an outsourced staffing provider, U.S. companies gain access to personnel who have already successfully implemented IFRS while educating permanent staff on the new standard’s requirements. With Kelly Financial Resources, these companies even have the option of permanently hiring this staff, ensuring that the company remains IFRS compliant and successfully attracts finance in today’s increasingly global marketplace.
Kelly Financial Resources has experienced and knowledgeable recruiters who find talent in a number of disciplines in accounting and finance fields, including public accounting, general accounting, payroll/billing, internal audit, tax, budgeting and cost accounting, financial analysis, treasury, cash management, investor relations, mergers and acquisitions, and credit management. For more information about Kelly Financial Resources, visit www.kellyfinance.com.
resourceshttp://www.ifrs.com/updates/aicpa/ifrs_faq.html#q1
http://www.ifrs.com/updates/aicpa/Backgrounder_pdf.html
http://www.cfo.com/article.cfm/10919122/c_3395216
http://www.cfo.com/article.cfm/10910052?f=related
http://www.cfo.com/article.cfm/12323586?f=search
http://www.cfo.com/article.cfm/11288569?f=related
http://www.kpmgifrsinstitute.com/documents/IFRS/10920081258328272008175029The_Effects_of_IFRS_on_Information_Systems082708.pdf
http://www.tmcnet.com/usubmit/2008/09/11/3645404.htm
http://www.reuters.com/article/pressRelease/idUS226850+22-May-2008+PRN20080522
http://www.ifrs.com/overview/Financial_Management/IFRS_Tunnel.html
CFO Research Services, January 2004: Finance under Pressure: How CFOs do more with less
http://www.deloitte.com/dtt/case_study/0,1005,cid%253D199929,00.html
http://www.pwc.com/lu/eng/about/ind/insurance_case.html
http://www.ifrs.com/overview/General/Adopting_IFRS.html
What is IFrS?Adopted and developed by the IASB, IFRS is a set of principle-based accounting standards and interpretations. In contrast to the more rules-based set of U.S. GAAP standards, IFRS contains substantially less detail and industry-specific instructions, requiring more professional judgment. For example, GAAP dedicates more than 160 rules to revenue recognition alone. To further illustrate the difference in detail, IFRS fills around 2,000 pages, assuming the size of a two-inch publication. GAAP runs around 25,000 pages, assuming the size of a nine-inch publication comprised of the FASB paperbacks of pronouncements and Emerging Issues Task Force consensuses.
There are several significant differences between U.S. GAAP and IFRS:
• IFRS does not allow the inventory costing method Last In First Out (LIFO).
• IFRS features an alternate probability threshold and measurement objective for contingencies.
• IFRS requires only one step for asset impairment recognition in contrast to the two-step process under GAAP. Thus, IFRS increases the likelihood of reporting asset impairment.
• IFRS does not allow the curing of debt covenant violations after year’s end.
Notably, companies must pay for the rights to republish GAAP text, as it contains proprietary, copyrighted information. Alternatively, the IASB waives copyright on IFRS bare standards to allow countries to write the text into their law.
With the globalization of capital markets, accounting leaders worldwide assert that convergence to one set of international financial reporting standards is essential for fostering economic growth. In December 2007, the International Federation of Accountants (IFAC) surveyed 143 professional accounting experts from 91 countries about the importance of convergence for economic growth. Ninety percent reported that it was “very important” or “important.” Merely 9 percent reported that it was only “somewhat important,” and 1 percent said it was not. Today, more than 100 countries require or accept IFRS reporting, including the U.S., which now allows foreign private issuers to file U.S. financial statements using IFRS without requiring reconciliation to GAAP.
SEC Chairman Christopher Cox recently proposed a timeline for moving U.S. public companies toward IFRS acceptance. In 2010, more than 100 large U.S. multinational public companies will be permitted to use IFRS. In 2011, the SEC will formally announce whether adoption will be mandatory—the same year that Canadian, Indian, and Japanese companies plan on adopting the international standards. If the SEC opts to mandate IFRS—it plans on formally announcing this decision in 2013—large public companies will be required to use IFRS in 2014, with all public companies following suit by 2016.
not Just the Financial Department“To properly prepare for IFRS, U.S. companies must first understand that the shift will not only affect the accounting and financial departments, but will have resulting impacts on all aspects of the company’s operations,” says Mike Gillan, Regional Manager of Kelly Financial Resources®.
Companies must educate preparers of financial statements, as well as preparers of tax returns, in the IFRS reporting method. As internal users of financial accounting information, tax preparers will need to understand the differences between GAAP and IFRS book methods, and how this difference affects the company. For example, the tax department will need to determine how the company can continue to use its historical tax method.
“For the IT department, thorough planning is essential in order to minimize conversion costs,” says Gillan. “It’s important to keep the entire business, information systems portfolio, and IT governance program in mind.” During implementation, the IT department is responsible not only for technical accounting issues, but also for implementing, modifying, remapping, or reconfiguring systems and processes to accommodate the changes in data, calculations, and reporting that result from conversion. Based on European conversions, the IT department could incur as much as 50 percent of the total convergence cost.
The shift will also greatly affect the HR department. Specifically, IFRS will change earnings, earnings per share, financial position, and possibly the reported metrics used for income, revenue, and net asset value. To ensure a smooth transition, Ernst & Young recommends that compensation committees closely collaborate with accounting and management to understand the transition’s impact on remuneration. The firm also recommends that the HR department secure personnel to manage the conversion, integrate seminars and professional development programs on IFRS into the finance departments, and effectively communicate changes to the entire organization.
U.S. companies can see how IFRS conversion can impact a business by looking at the experiences of a leading global automotive manufacturer. Launching its conversion process in 2003, Daimler AG trained 3,000 employees, in departments from accounting and treasury to controlling, investor relations, and tax—just to craft the internal guidelines for IFRS application, analyze the potential impact of the new rules on performance measures, and reconfigure its IT systems.
Additionally, the SEC notes in its 2007 Concept Release that IFRS adoption may generate an inundation of queries and comments from international securities regulators. “U.S. issuers with listings in multiple securities markets could find more than one securities regulator commenting upon their IFRS financial statements,” the SEC says. “Because it is likely that not everyone will apply accounting standards consistently or appropriately, securities regulators are developing infrastructure to identify and address
the application of IFRS globally.” In essence, U.S. companies need to be prepared with personnel that can competently handle these international securities regulators.
learning from the PastWith the introduction of the Sarbanes-Oxley Act (Sarbox) in 2002—which basically rewrote the rules for corporate governance, disclosure, and reporting—a majority of U.S. companies learned that compliance is no small endeavor. To comply with Section 404 alone, the Financial Executives International (FEI) found that companies expected to dedicate an average of 12,265 hours internally, based on a survey it conducted in January 2004. Also for Section 404 compliance, these companies expected to contract 3,059 hours. For many companies, the implementation was an extremely costly experience, especially for those opting to hire a large-scale assurance, tax, and financial advisory consultant.
Like Sarbox, it is essential that U.S. companies understand the efforts and resources required to ensure IFRS compliance. For instance, auditors estimate that it takes 18 to 24 months to install an IFRS-based accounting system. Gillan notes that after evaluating their entire financial infrastructure, companies will also need time to figure out how to adapt it to the new system. Based on the experiences of European companies, the entire implementation could take about three years.
To minimize costs while maximizing efficiencies during IFRS implementation, companies may want to consider a contract staffing provider. “Tapping into the specialized skill sets of outside resources for assistance is a quick, cost-effective solution that provides more extensive experience in IFRS accounting and reporting than permanent staff,” says Gillan.
readying for IFrSPrior to the SEC’s 2010 decision on whether to mandate IFRS, it would be prudent for U.S. companies of all sizes to evaluate convergence as early as possible. One of the priorities should be to provide staff with proper training on IFRS accounting and reporting.
Deloitte conducted a survey on IFRS in 2008, “Where Are We Today,” and found a considerable need for more IFRS-focused preparation and training. More than 60 percent of companies reported a lack of personnel with IFRS knowledge to handle conversion. In parallel, the SEC noted in its 2007 Concept Release that a potential issue with convergence is limited experience in preparing IFRS financial statements. Industry experts note that it is important for organizations to have professionals in place and equipped with the right education and training to support this initiative.
Gillan suggests that companies also need to develop an implementation roadmap to properly assess IFRS adoption. The plan should establish a timeline of events up until the expected adoption date while considering the effects on areas other than technical accounting, such as tax structure, treasury and
cash management activities, technology and financial reporting systems, internal controls and processes, human resources and compensation, and asset valuation.
Why experienced Staffing is KeyMost company resources currently focus on maintaining and strengthening their knowledge of U.S. GAAP requirements, which will clearly need to change for the transition to IFRS. However, reallocating current resources to address the conversion will leave behind gaps in the personnel that continue to use GAAP. And the cost just to replace a mid- to high-level finance employee can be more than $50,000, according to FEI and Watson Wyatt. Moreover, organizations will need to reengineer the reallocated staff’s function structure and ensure that they are highly trained in IFRS—at any cost.
The reality of adopting IFRS while avoiding costly downtime can be daunting for companies, regardless of geographical location. In its survey of worldwide leaders in the accounting profession, the IFAC determined “application of new accounting standards” as the number one issue facing accountants in business. However, there are professional staffing providers with a track record for successful implementations that U.S. companies can use. In effect, companies eliminate prospective risks and costs during the transition. “A smooth transition is crucial,” cautions Gillan. “An unsuccessful implementation could lead to federal financial sanctions resulting from accounting errors and—even more damaging—lack of consumer confidence and community investment.”
Success Stories in IFrS AdoptionDespite the challenges companies may face in making the transition, IFRS has been successfully implemented by numerous organizations around the world.
implementation A: A global finance company with more than 100 subsidiaries in 70 countries wanted to consolidate, streamline, and strengthen its statutory reporting processes to increase transparency into the organization. However, limited visibility into the reporting processes and requirements clouded the ability to determine the company’s existing risk exposure at the subsidiary level and opportunities to optimize reporting. With the help of a staffing provider experienced in IFRS, the company looked at the “IFRS landscape” across the entire organization and assessed its readiness for conversion. Following implementation, the large company has seen improvements in its financial and tax reporting processes, treasury processes, and internal controls, as well as generated cost savings.
Implementation B: To issue consolidated financial statements under the IFRS framework as required by the EU, a major insurance company in Luxembourg wanted to implement a financial reporting process according to IFRS rules. Initially, outsourced experts in IFRS performed a review to determine the potential impact of the new standards on the company’s financial statements. After seeing the chief differences between using the existing accounting principles
What is IFrS?Adopted and developed by the IASB, IFRS is a set of principle-based accounting standards and interpretations. In contrast to the more rules-based set of U.S. GAAP standards, IFRS contains substantially less detail and industry-specific instructions, requiring more professional judgment. For example, GAAP dedicates more than 160 rules to revenue recognition alone. To further illustrate the difference in detail, IFRS fills around 2,000 pages, assuming the size of a two-inch publication. GAAP runs around 25,000 pages, assuming the size of a nine-inch publication comprised of the FASB paperbacks of pronouncements and Emerging Issues Task Force consensuses.
There are several significant differences between U.S. GAAP and IFRS:
• IFRS does not allow the inventory costing method Last In First Out (LIFO).
• IFRS features an alternate probability threshold and measurement objective for contingencies.
• IFRS requires only one step for asset impairment recognition in contrast to the two-step process under GAAP. Thus, IFRS increases the likelihood of reporting asset impairment.
• IFRS does not allow the curing of debt covenant violations after year’s end.
Notably, companies must pay for the rights to republish GAAP text, as it contains proprietary, copyrighted information. Alternatively, the IASB waives copyright on IFRS bare standards to allow countries to write the text into their law.
With the globalization of capital markets, accounting leaders worldwide assert that convergence to one set of international financial reporting standards is essential for fostering economic growth. In December 2007, the International Federation of Accountants (IFAC) surveyed 143 professional accounting experts from 91 countries about the importance of convergence for economic growth. Ninety percent reported that it was “very important” or “important.” Merely 9 percent reported that it was only “somewhat important,” and 1 percent said it was not. Today, more than 100 countries require or accept IFRS reporting, including the U.S., which now allows foreign private issuers to file U.S. financial statements using IFRS without requiring reconciliation to GAAP.
SEC Chairman Christopher Cox recently proposed a timeline for moving U.S. public companies toward IFRS acceptance. In 2010, more than 100 large U.S. multinational public companies will be permitted to use IFRS. In 2011, the SEC will formally announce whether adoption will be mandatory—the same year that Canadian, Indian, and Japanese companies plan on adopting the international standards. If the SEC opts to mandate IFRS—it plans on formally announcing this decision in 2013—large public companies will be required to use IFRS in 2014, with all public companies following suit by 2016.
not Just the Financial Department“To properly prepare for IFRS, U.S. companies must first understand that the shift will not only affect the accounting and financial departments, but will have resulting impacts on all aspects of the company’s operations,” says Mike Gillan, Regional Manager of Kelly Financial Resources®.
Companies must educate preparers of financial statements, as well as preparers of tax returns, in the IFRS reporting method. As internal users of financial accounting information, tax preparers will need to understand the differences between GAAP and IFRS book methods, and how this difference affects the company. For example, the tax department will need to determine how the company can continue to use its historical tax method.
“For the IT department, thorough planning is essential in order to minimize conversion costs,” says Gillan. “It’s important to keep the entire business, information systems portfolio, and IT governance program in mind.” During implementation, the IT department is responsible not only for technical accounting issues, but also for implementing, modifying, remapping, or reconfiguring systems and processes to accommodate the changes in data, calculations, and reporting that result from conversion. Based on European conversions, the IT department could incur as much as 50 percent of the total convergence cost.
The shift will also greatly affect the HR department. Specifically, IFRS will change earnings, earnings per share, financial position, and possibly the reported metrics used for income, revenue, and net asset value. To ensure a smooth transition, Ernst & Young recommends that compensation committees closely collaborate with accounting and management to understand the transition’s impact on remuneration. The firm also recommends that the HR department secure personnel to manage the conversion, integrate seminars and professional development programs on IFRS into the finance departments, and effectively communicate changes to the entire organization.
U.S. companies can see how IFRS conversion can impact a business by looking at the experiences of a leading global automotive manufacturer. Launching its conversion process in 2003, Daimler AG trained 3,000 employees, in departments from accounting and treasury to controlling, investor relations, and tax—just to craft the internal guidelines for IFRS application, analyze the potential impact of the new rules on performance measures, and reconfigure its IT systems.
Additionally, the SEC notes in its 2007 Concept Release that IFRS adoption may generate an inundation of queries and comments from international securities regulators. “U.S. issuers with listings in multiple securities markets could find more than one securities regulator commenting upon their IFRS financial statements,” the SEC says. “Because it is likely that not everyone will apply accounting standards consistently or appropriately, securities regulators are developing infrastructure to identify and address
the application of IFRS globally.” In essence, U.S. companies need to be prepared with personnel that can competently handle these international securities regulators.
learning from the PastWith the introduction of the Sarbanes-Oxley Act (Sarbox) in 2002—which basically rewrote the rules for corporate governance, disclosure, and reporting—a majority of U.S. companies learned that compliance is no small endeavor. To comply with Section 404 alone, the Financial Executives International (FEI) found that companies expected to dedicate an average of 12,265 hours internally, based on a survey it conducted in January 2004. Also for Section 404 compliance, these companies expected to contract 3,059 hours. For many companies, the implementation was an extremely costly experience, especially for those opting to hire a large-scale assurance, tax, and financial advisory consultant.
Like Sarbox, it is essential that U.S. companies understand the efforts and resources required to ensure IFRS compliance. For instance, auditors estimate that it takes 18 to 24 months to install an IFRS-based accounting system. Gillan notes that after evaluating their entire financial infrastructure, companies will also need time to figure out how to adapt it to the new system. Based on the experiences of European companies, the entire implementation could take about three years.
To minimize costs while maximizing efficiencies during IFRS implementation, companies may want to consider a contract staffing provider. “Tapping into the specialized skill sets of outside resources for assistance is a quick, cost-effective solution that provides more extensive experience in IFRS accounting and reporting than permanent staff,” says Gillan.
readying for IFrSPrior to the SEC’s 2010 decision on whether to mandate IFRS, it would be prudent for U.S. companies of all sizes to evaluate convergence as early as possible. One of the priorities should be to provide staff with proper training on IFRS accounting and reporting.
Deloitte conducted a survey on IFRS in 2008, “Where Are We Today,” and found a considerable need for more IFRS-focused preparation and training. More than 60 percent of companies reported a lack of personnel with IFRS knowledge to handle conversion. In parallel, the SEC noted in its 2007 Concept Release that a potential issue with convergence is limited experience in preparing IFRS financial statements. Industry experts note that it is important for organizations to have professionals in place and equipped with the right education and training to support this initiative.
Gillan suggests that companies also need to develop an implementation roadmap to properly assess IFRS adoption. The plan should establish a timeline of events up until the expected adoption date while considering the effects on areas other than technical accounting, such as tax structure, treasury and
cash management activities, technology and financial reporting systems, internal controls and processes, human resources and compensation, and asset valuation.
Why experienced Staffing is KeyMost company resources currently focus on maintaining and strengthening their knowledge of U.S. GAAP requirements, which will clearly need to change for the transition to IFRS. However, reallocating current resources to address the conversion will leave behind gaps in the personnel that continue to use GAAP. And the cost just to replace a mid- to high-level finance employee can be more than $50,000, according to FEI and Watson Wyatt. Moreover, organizations will need to reengineer the reallocated staff’s function structure and ensure that they are highly trained in IFRS—at any cost.
The reality of adopting IFRS while avoiding costly downtime can be daunting for companies, regardless of geographical location. In its survey of worldwide leaders in the accounting profession, the IFAC determined “application of new accounting standards” as the number one issue facing accountants in business. However, there are professional staffing providers with a track record for successful implementations that U.S. companies can use. In effect, companies eliminate prospective risks and costs during the transition. “A smooth transition is crucial,” cautions Gillan. “An unsuccessful implementation could lead to federal financial sanctions resulting from accounting errors and—even more damaging—lack of consumer confidence and community investment.”
Success Stories in IFrS AdoptionDespite the challenges companies may face in making the transition, IFRS has been successfully implemented by numerous organizations around the world.
implementation A: A global finance company with more than 100 subsidiaries in 70 countries wanted to consolidate, streamline, and strengthen its statutory reporting processes to increase transparency into the organization. However, limited visibility into the reporting processes and requirements clouded the ability to determine the company’s existing risk exposure at the subsidiary level and opportunities to optimize reporting. With the help of a staffing provider experienced in IFRS, the company looked at the “IFRS landscape” across the entire organization and assessed its readiness for conversion. Following implementation, the large company has seen improvements in its financial and tax reporting processes, treasury processes, and internal controls, as well as generated cost savings.
Implementation B: To issue consolidated financial statements under the IFRS framework as required by the EU, a major insurance company in Luxembourg wanted to implement a financial reporting process according to IFRS rules. Initially, outsourced experts in IFRS performed a review to determine the potential impact of the new standards on the company’s financial statements. After seeing the chief differences between using the existing accounting principles
issues&trendsA Kelly finAnciAl resources® report
All trademarks are property of their respective owners.Kelly Financial Resources, A Business Unit of Kelly Services
An Equal Opportunity Employer© 2008 Kelly Services, Inc. T2517 supply #1160 11/08
IntroductionFor years, the Securities and Exchange Commission (SEC) has advocated efforts to develop a single set of high-quality, global accounting standards. Thus it came as no surprise when the SEC unanimously voted on August 27, 2008 to issue a schedule of milestones that would ultimately lead U.S. public companies to the acceptance of the International Financial Reporting Standards (IFRS).
As a major initial step toward cross-border accounting standards, in 2002 the SEC announced its support of the Norwalk agreement, a memorandum of understanding between the U.S.-based accounting standard-setting body, the Financial Accounting Standards Board (FASB), and the London-based accounting standard-setting body,
the International Accounting Standards Board (IASB). The agreement essentially stated that the two groups would jointly develop accounting standards that could be used for domestic as well as international financial reporting.
The FASB and the IASB later established a plan to align the U.S. Generally Accepted Accounting Principles (GAAP) with the IFRS. The convergence would allow U.S. public companies to present financial statements under the same rules as foreign companies and standardize accounting standards across international subsidiaries. Aligning the two plans would likely facilitate capital formation in the U.S. and stimulate growth in today’s global economy.
From GAAP to IFrS:overcomInG StAFFInG chAllenGeS
and using IFRS, the company could identify the accounts that needed to be adjusted for compliance, evaluate the conversion’s impact on its existing financial, reporting and IT processes, and develop action plans to implement the new reporting system.
implementation c: Most European countries have adopted some version of IFRS. During Israel’s implementation of the standards, the country was required to report on their preparation activities as well as on the expected financial implications. The editor of The Accountant, a publication of the Institute of Certified Public Accountants in Israel, says that companies, auditors, analysts and banks will no doubt experience trying times as they adjust to the new language, but he also assures that it is worth it. Specifically, he estimates that the conversion will encourage more Israeli companies to list on U.S. exchanges, as they will be able to carry out flotations more easily and at a higher value, making it easier for them to raise capital.
To properly approach the migration to IFRS based on these global experiences, U.S. organizations should first evaluate how the implementation will potentially impact financial statements. By then reviewing the key differences between GAAP and IFRS, the company can develop a strategic plan with the help of experts in IFRS for compliance. In effect, the implementation optimizes reporting processes and increases business transparency to attract investors. At the same time, the company benefits from economic growth as foreign companies increasingly list securities in the U.S.
how companies Benefit from contract StaffingProfessionals versed in IFRS not only help companies circumvent prospective risks and costly disruptions to operations during conversion, but also provide expert management throughout the process. With contract staffing, companies temporarily acquire a supplemental team of financial professionals with independent expertise in areas such as valuation of contingencies, derivatives, and defined benefit plans—on a flexible cost structure, as opposed to hiring costly permanent staff.
These knowledgeable professionals can start as soon as necessary, avoiding downtime caused by transitioning existing staff to IFRS-dedicated efforts, and thereby facilitate the transition without disrupting normal operations. Of further benefit to the company, reputable contract personnel can provide extensive on-the-job training on IFRS procedures for various departments, on critical subjects such as the momentum-gaining eXtensible Business Reporting Language (XBRL), a technical language used to exchange business information, submit financial reports, and analyze corporate financial performance. The IASB’s XBRL Advisory Council (XAC) and Quality Review Team (XQRT) are currently driving the implementation of XBRL and IFRS through the use of XBRL.
“Through providers such as Kelly Financial Resources, U.S. companies can gain access to an international talent pool of professionals who have worked comprehensively with the IFRS-based accounting system,” says Gillan. These professionals have successfully helped other organizations make the transition cost-effectively.
conclusionThe conversion to IFRS from U.S. GAAP will greatly impact U.S. companies’ existing accounting policies for financial instruments, deferred tax, pensions, provisions, special-purpose entities, employee-share options, and more. To alleviate the many potential complexities and risks associated with the conversion, companies need to dedicate staff to the project. With an outsourced staffing provider, U.S. companies gain access to personnel who have already successfully implemented IFRS while educating permanent staff on the new standard’s requirements. With Kelly Financial Resources, these companies even have the option of permanently hiring this staff, ensuring that the company remains IFRS compliant and successfully attracts finance in today’s increasingly global marketplace.
Kelly Financial Resources has experienced and knowledgeable recruiters who find talent in a number of disciplines in accounting and finance fields, including public accounting, general accounting, payroll/billing, internal audit, tax, budgeting and cost accounting, financial analysis, treasury, cash management, investor relations, mergers and acquisitions, and credit management. For more information about Kelly Financial Resources, visit www.kellyfinance.com.
resourceshttp://www.ifrs.com/updates/aicpa/ifrs_faq.html#q1
http://www.ifrs.com/updates/aicpa/Backgrounder_pdf.html
http://www.cfo.com/article.cfm/10919122/c_3395216
http://www.cfo.com/article.cfm/10910052?f=related
http://www.cfo.com/article.cfm/12323586?f=search
http://www.cfo.com/article.cfm/11288569?f=related
http://www.kpmgifrsinstitute.com/documents/IFRS/10920081258328272008175029The_Effects_of_IFRS_on_Information_Systems082708.pdf
http://www.tmcnet.com/usubmit/2008/09/11/3645404.htm
http://www.reuters.com/article/pressRelease/idUS226850+22-May-2008+PRN20080522
http://www.ifrs.com/overview/Financial_Management/IFRS_Tunnel.html
CFO Research Services, January 2004: Finance under Pressure: How CFOs do more with less
http://www.deloitte.com/dtt/case_study/0,1005,cid%253D199929,00.html
http://www.pwc.com/lu/eng/about/ind/insurance_case.html
http://www.ifrs.com/overview/General/Adopting_IFRS.html