EY IFRSComments

EY IFRSComments

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Unformatted text preview: ina, India, Japan and Korea — have announced their intention either to converge their national standards with IFRS or convert to IFRS within the next three years. As it becomes more likely that US companies will ultimately have the option or be required to file their financial statements in accordance with IFRS, BoardMatters Quarterly discussed the conversion process with Michael Starkie, Chief Accounting Officer (CAO) of global energy giant, BP p.l.c. (BP). BP is registered with the US Securities and Exchange Commission (SEC) and has over US $290 billion in revenues and more than 97,000 employees spread across the world. 6 BoardMatters Quarterly April 2008 At BP for more than 30 years, Starkie has been the CAO for the past 14. Additionally, he serves as Chairman of the Confederation of British Industry Financial Reporting Panel and is a member of the European Financial Reporting Advisory Group, which advises the European Commission on the adoption of International Financial Reporting Standards and Interpretations in the European Union. Starkie spearheaded BP’s conversion from UK GAAP to IFRS for its 2005 annual reporting period. His close involvement with a large IFRS conversion project and his SEC reporting experience enable him to offer valuable advice to companies either commencing their conversion process or merely considering the potential effect that IFRS might have on their businesses. While BP’s conversion to IFRS had its challenges, Starkie believes the widespread adoption of IFRS is valuable. “The primary benefit of IFRS is that it represents a common accounting language across an increasing number of geographies; whether or not people think that IFRS is better than the alternative national GAAPs that it is superseding is not really important,” he said. Starkie believes that the mere fact that the world is moving towards a global set of standards is an extremely positive step for the global capital markets, as long as the standards are applied consistently and enforced on a reasonably transparent basis across all markets. Starkie’s advice to companies about converting to IFRS is simple — start early and do not underestimate the amount of time and resources that will be required to execute the conversion. Starkie acknowledges that the impact assessment was key to convincing everybody in the organization — including the chief executive officer — that the conversion to IFRS would be far more than just a technical accounting exercise. BP began its IFRS conversion process at the end of 2002, approximately two years before its required adoption date of 1 January 2005. While an on-going release of new IFRS pronouncements added additional challenges to the timeline, the entire conversion was completed according to schedule in 2005. To prepare for the conversion, BP trained over 1,200 employees worldwide to convert its 2003 and 2004 financial statements and implement IFRS for the first quarter of 2005. “This was not a case of the work expanding to fill the time available. Instead, the time available w...
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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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