Create comparative financials to identify changes between standards
In order to provide consistency in financial reporting globally, there is a movement away from GAAP toward IFRS. International Financial Reporting Standards (IFRS) are a set of accounting standards developed by the International Accounting Standards Board (IASB) that is becoming the global standard for the preparation of public company financial statements.
Some differences between the reporting standards will impact:
- Revenue Recognition
- Lease Capitalization
Although the timing and exact requirements are a moving target, it can’t hurt to start planning now. Once adopted, there will be a three-year look-back related to the IFRS Statement of Financial Position (GAAP Balance Sheet). So, if adopted in 2016, financial presentation will begin in 2013.
Here are some ideas of items you may want to include on your checklist to prepare for this impending change.
- Identify resource needs
- Identify G/L accounts that will be impacted
- Determine where source data for impacted accounts resides:
- Are system or programming changes required?
- Are changes to manual processes needed?
- Create different scenarios to determine the impact of the potential accounting changes
- Analyze changes to determine business impact:
- Management decisions
- Budgeting process
- Network with peers in similar industries – discuss best practice ideas
- Work with your internal and external auditors – make sure you are all on the same page
- Document a change management plan
- Check for updates at IFRS.com
Ultimately, having an effective reporting tool to create pro-forma IFRS financial statements to compare to GAAP financial statements and explain difference between the standards will ease the burden of implementing required changes. In addition, a reporting tool that provides a central repository to track, document, support and sign-off on the appropriateness of the differences will create efficiencies and lend transparency to your financial reports.
Learn more in this helpful overview.
 IFRS.com, retrieved November 9, 2012, from http://www.ifrs.com/ifrs_faqs.html