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Why IFRS?
International Financial Reporting Standards
Globally accepted accounting standards and interpretations Adopted by over 100 countries including the EU
SEC agreed to a roadmap that may lead to all U.S companies adopting IFRS by 2014
SEC to determine this mandate in 2011 Seven milestones will influence decision
Global consolidation Sub-system issues related to configuration and data capture Capabilities to manage multiple GAAP accounting during transition
Types of changes
New data requirements Selection & implementation of new system Reconfiguration of existing systems Interface and mapping changes Modifications to existing systems Consolidations of entities Reporting packs Financial reporting tools Changes to chart of accounts
Late start often resulted in escalation of costs Many did not achieve business as usual state for IFRS reporting
IFRS in the UK
Financial statements on average 50% longer Challenging Issues
New disclosures in complex areas Valuation of financial instruments & intangible assets Accounting for deferred tax Pension deficits on B/S
Disclose key valuation assumptions
IT Conversion Effort
Time, complexity and cost may differ for each topic based on company-specific circumstances Advisors/Consultants may help
Protiviti PwC, KMPG, Deloitte, and Ernst & Young
Conclusion
Like the Sarbanes-Oxley Act before it, IFRS will significantly impact IT departments How to plan a smooth IFRS adoption
Important to plan early Set the tone at the top for solid foundation Include heads of IT departments right at the beginning Understand the differences between U.S. GAAP and IFRS will translate to technical specifications