IFRS Readiness Study

A worldwide changeover to International Financial Reporting Standards (IFRS) from different accounting standards around the globe – including US Generally Accepted Accounting Principles (GAAP) – is well underway. Over 12,000 companies are estimated to have adopted IFRS, motivated not only by regulatory mandate, but also by globalization of business and the need for transparency and consistent reporting across multiple companies and countries.

IFRS is not merely a different way of reporting. It is, like GAAP, a performance measurement system unto itself. Conversion to IFRS will have an impact, direct or indirect, upon most business decisions. IFRS will probably become a near-universal standard for accounting and business reporting. For the strategically minded CFO, conversion to IFRS presents an opportunity to improve, unify, and standardize the finance organization, particularly its processes and software standards.

In 2005, the European Union approved IFRS in order to make financial statements by all public companies throughout Europe comparable and more transparent. In the USA, the SEC has proposed 2011 as the year for adoption of IFRS. The SEC does not necessarily believe IFRS will do a better job of protecting US investors, but the need for a globally uniform reporting standard becomes more obvious each year. In Canada, the Accounting Standards Board (AcSB) has proposed that public companies migrate from Canadian GAAP to IFRS over a transitional period, with full implementation required by the end of the 2011 fiscal year. Regardless of the timetable, everyone in business will need to know as much about IFRS as they know today about GAAP, and businesses will need to be fully ready for the significant changes that will accompany IFRS.

In February 2010, the US Securities and Exchange Commission (SEC) released a Statement on Global Accounting Standards that paved the way for a probable 2011 decision on the use of IFRS. The outcome of that decision could be the mandatory adoption of IFRS by some 18,000 US public companies as early as 2015, with comparative IFRS figures being required from 2013. This transition would affect up to a million preparers and users of US financial statements.

Our experienced consultants in the subject matter (US GAAP and IFRS) can advise you the best route to suit your business model, rather than change the way you do business.