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The Transition to International Financial Reporting Standards (IFRS): Let’s Learn From Others

31/03/2010


In 2011 (or maybe earlier), many Canadian enterprises are going to be adopting IFRS. Several other countries in Europe, and South Africa and Australia, have already adopted IFRS and have been operating under these standards for a number of years. If your company or organization is adopting IFRS, you have most likely just begun your transition. You may want to consider some of the issues these areas identified when they transitioned to IFRS, and learn from them.

One of the most frequent comments made was that companies underestimated the complexity and effort required to transition successfully. As well, they didn’t fully appreciate the importance of having a qualified project management team to run the transition. Having an experienced team running the transition will help you ensure all areas of the transition are adequately addressed and enough time is allowed to perform the transition. Developing a timeline with key milestone dates will help your project team, as well as senior management and the Board of Directors, understand how much work is needed for a successful transition.

Another common issue was the lack of Board and senior management buy-in at the start of the transition. In order to get the Board and senior management onside, training is important so they can understand the transition to IFRS, and how and why the numbers are going to change in the financial statements.

Further, the IFRS conversion will affect your entire business, so the conversion processes and procedures should be pushed down through the company, right down to the transaction level. Having everyone on board for this process could avoid a lot of frustration in the future.

Finally, you should be aware that items not significant under current standards may be of utmost importance under IFRS. Slight changes in accounting policies should not be overlooked as they can have an enormous effect on accounting for transactions and events.

With 2011 fast approaching, we encourage you to take advantage of the “lessons learned” by those companies who’ve already been through the IFRS transition.

For more information on the right solution for you and your business, please feel free to contact me or your local MNP advisor.