EY IFRSComments

Although not all companies within the same industry

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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 to consider • What does the company need to do to prepare for an IFRS conversion? • Would the company consider early adoption? • 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 under IFRS? • 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 capital markets? • 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.

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