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Unformatted text preview: ertain industries where a US
company will find that the majority of
its competitors are reporting under IFRS. 4 Second, as previously mentioned,
multi-nationals may well have
subsidiaries that are already using IFRS BoardMatters Quarterly April 2008 It is clear that converting to IFRS is
not merely an accounting exercise; it
is an exercise in change management.
IFRS may affect many facets of the
organization beyond financial reporting.
Every aspect of the company affected
by financial information has the potential
for change (e.g., key performance
indicators, employee and executive
compensation plans, management’s
internal reporting). Converting to IFRS
is a business-wide change management
exercise where both the process and the
implications of the conversion can vary
widely among companies based on a
number of variables, such as levels of
expertise, degree of centralization of
accounting processes and data collection
and the number of existing accounting
methods currently being used.
Accounting and tax processes also
should be evaluated to determine the
extent to which the controls, policies
and current reporting processes would
support a transition to IFRS. Because
IFRS may require the accumulation of
different amounts and performance
of different calculations, information
technology (IT) systems must also
be evaluated to determine whether
modifications are needed. Though it
is unlikely that a transition to IFRS
would require a complete overhaul of
IT systems, the upstream processes
around collecting financial data would
likely need to be modified. Some
European companies that converted to
IFRS used quick-fix solutions to capture
data and compute IFRS adjustments
rather than designing processes to drive Questions for the audit
committee and board
• What does the company need
to do to prepare for an IFRS
• Would the company consider
• What is the timeline for IFRS
conversion and what resources
will be required?
• What are the anticipated highlevel differences in accounting
and disclosure that would result
• Other than financial reporting,
which other business areas will
be affected by the conversion?
• What is the impact of IFRS
conversion on stakeholders
and what should be done to
manage the expectations of
• How many of our subsidiaries
are currently reporting on
IFRS or IFRS-based standards?
Is there a control/process in
place to ensure the consistent
interpretation of IFRS in each
of these locations?
• Are any of the company’s
major competitors presently
following IFRS? change into the back-office procedures
and general ledger systems. The
result was the creation of inefficient
processes that were prone to greater
error and breakdowns in internal
control. Early planning will allow
companies to develop comprehensive
solutions rather than processes that
merely patch the systems and might
not be compatible with Sarbanes-Oxley
Section 404 requirements.
Other important factors to consider in
connection with a possible change to
IFRS include IFRS technical training for
employees, communications strat...
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This note was uploaded on 11/21/2009 for the course ACC acc 310 taught by Professor Mlot during the Fall '09 term at N.C. State.
- Fall '09