Are You Prepared for IFRS? The Time to Get Ready is Now.

By Steve Schott, President – Partner Finance

Today, nearly 100 countries use International Financial Reporting Standards (IFRS) for the preparation of financial statements. As the convergence of U.S. Generally Accepted Accounting Principles (GAAP) with IFRS begins, the SEC may set a rule to provide U.S. publicly held corporations the option to forego GAAP in favor of IFRS in advance of the formal shift.

The impending move to IFRS represents the single most important initiative in the financial reporting world, the impact of which stretches far beyond accounting, to affect nearly every decision a company makes. Preparing your company for the shift to IFRS will be no easy task. The adoption of IFRS will create a domino effect that will impact every aspect of your organization – accounting to be sure, but also systems and processes, capital and operating leases and even pension plans - among many others.

While many in the U.S. view IFRS as substandard to GAAP, there are some benefits to moving to IFRS. The primary benefit that U.S. public companies receive when adopting IFRS is the ability to report financials on the same bases used by their foreign competitors. In addition, global companies with foreign subsidiaries that already use IFRS may be able to implement an enterprise-wide financial reporting language.

As the American Institute of Certified Public Accountants (AICPA) pushes for a defined timeline, documented, proactive strategies and implementation plans will be critical to the successful adoption in advance of the deadline. In a June 2008 press release, AICPA president and CEO Barry Melancon suggested that "Awareness is growing among U.S. accountants that IFRS is coming for public companies and most believe it will take three to five years to get ready. The overwhelming feedback we get from people who focus on this issue is, Let's get it done…let's get a date certain for public companies. Let's put that date out there so the momentum can build, all of the proper steps can be put in place, and work groups that need to be in a whole variety of different areas can follow.”

What does IFRS mean for accounting professionals?

Accounting and finance professionals in all experience levels are already beginning to feel the pressure of IFRS. CFOs will likely revise their criteria for auditing firms and committees to include only those with specific experience in IFRS. In addition, hiring authorities and HR departments will soon place favor on candidates with some degree of IFRS training and/or experience. As companies invest in the training and education that will be necessary to adopt the new standards, finance and accounting professionals must take advantage. Colleges and universities will soon introduce new coursework to address the shift, and professional associations such as the AICPA have already launched new learning resources such as www.IFRS.com. As in any industry, accounting and finance professionals must adapt to change. Finance and accounting professionals currently working for publicly traded and/or global firms, as well as those seeking to do so in the future will be affected. To remain in high demand, proactively seek out these learning opportunities and take new assignments that allow you to build on-the-job IFRS experience now.

To begin your research, please download the AICPA Backgrounder on IFRS (https://media.cpa2biz.com/Publication/IFRS/1924_IFRS_Backgrounder_v3_web...)