EY IFRSComments

Of course all of these changes may necessitate

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Unformatted text preview: egy for analysts and investors and determining what changes will be necessary in the company’s internal control over financial reporting. Of course, all of these changes may necessitate increased oversight responsibility by boards and audit committees. What should your company be doing? Our experience working with European clients suggests that IFRS conversion projects take approximately two to three years, and that early planning is critical to successful transition. Where appropriate, companies should perform a high-level assessment to understand what the effect would be to the organization and its financial statements. Management and boards of directors should visualize the extent and complexity of the IFRS conversion to make better decisions about how to plan, structure and resource the project. The lessons learned from European companies make it very clear that conversion considerations cannot be adequately assessed without an appropriate diagnostic and resulting project plan that realistically projects BoardMatters Quarterly April 2008 the time needed to complete all necessary steps. Based on observations of other jurisdictions that have converted to IFRS, some companies will be challenged by a shortage of trained resources. Addressing the organization’s skill requirements and potential needs should therefore be an immediate priority for management. Success factors Besides starting early, other critical success factors in IFRS conversion efforts include strong project leadership, buy-in throughout the entire organization, harmonization of internal and external reporting, identification and timely alleviation of bottlenecks and planning for the differences in financial statement disclosure requirements. Sufficient management of investor communications and perceptions has also been a success factor. Moreover, companies are recognizing that, if done correctly, an organization-wide conversion to a new basis of accounting will present opportunities to take a fresh look at existing practices and create efficiencies by redesigning how the organization captures, processes and reports financial information. Audit committees and boards should pay close attention to the details of management’s proposed approach to IFRS conversion and satisfy themselves that the plan covers all appropriate areas and is based on sound project management principles. While management will be responsible for the IFRS conversion execution, the audit committee and board must be confident in management’s plan, thoroughness and diligence. ✔ 5 IFRS conversion: lessons learned from BP 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. The growth of International Financial Reporting Standards (IFRS) as the leading global financial framework is due to many different factors, including the adoption of — and smooth transition to — IFRS in 2005 across Europe and in many other countries around the world, such as South Africa and Australia. In addition, several countries that are major participants in the global economy — Brazil, Canada, Ch...
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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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