Lessons learned from enterprises in Europe, South Africa and Australia that have already adopted IFRS

South Africa, Australia and most of Europe converted to IFRS in 2005. As a result of the early conversion, companies learned the following lessons:

• Support from senior management is critical throughout all stages of the project, including educating key executives and board members.
• An investment is required to educate staff, perform IT upgrades and conduct contract negotiations (i.e. financial covenants on debt, bonuses and other compensation packages).
• Enterprises underestimated the effort required to transition to IFRS. The transition involves significant changes to data collection and other internal processes, not just a back-end accounting change that can be performed at year end.
• Ongoing, targeted communication with shareholders, financial institutions and the market is essential, including communicating IFRS transition issues early so you can manage market expectations.
• Audit committees need to know:
  • Who is leading the implementation of IFRS?
  • What is the company’s timetable?
• Implementation challenges can arise from:
  • A lack of preliminary planning and delay in starting the transition.
  • Poor project management and the lack of a formal process for identifying and resolving issues.

To find out how MNP can help you make the transition to IFRS, please contact your local MNP advisor or call Jason Kingshott, CA, at 1.877.500.0792.