What is IFRS?
International Financial Reporting Standards (IFRS) are a single set of globally accepted high-quality accounting standards. They are issued by the International Accounting Standards Board (IASB) in London, UK. The Board consists of 14 members from around the world.
Is your organization prepared for the 2011 transition to IFRS?
Will you be ready for 2011?
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In 2011 Canada will adopt the same accounting standards used by publicly accountable enterprises in the EU and many other countries around the world. International Financial Reporting Standards (IFRS) are being promoted as a single set of high quality, understandable and enforceable global standards.
What organizations are impacted?
"Publicly accountable enterprises" will be required to move to IFRS — that includes publicly traded companies as well as other enterprises that hold assets in a fiduciary capacity for broad groups of outsiders. The Accounting Standards Board of Canada (AcSB) is still planning the strategy for accounting standards that will apply to private businesses and not-for-profit organizations.
Why the transition to IFRS is so important.
Using IFRS should enable Canadian companies to increase their global reach, providing shareholders and regulators with financial information that has enhanced comparability and transparency. Companies should have easier access to international capital, funding, and investment opportunities.
Some questions to consider when planning your transition to IFRS.
- What are the major differences between IFRS and Canadian GAAP for our organization?
- What will be the likely impact on our financial statements, including disclosures?
- How will our financial reporting systems be able to capture the data required by IFRS?
- What is the estimated directional impact on profit and equity if our financial statements were presented under IFRS?
- What other impacts might the transition to IFRS have?
- earnings per share?
- dividend policy?
- financing arrangements / covenants?
- performance management?
- employee compensation and incentive plans?
- tax implications?
- statutory and regulatory reporting?
- communications to analysts and stakeholders?
- Do we have adequate resources to manage the transition efficiently?
- What is the impact on new and existing internal controls over financial reporting for certification purposes?
- What are the training needs of your finance and other personnel?
Is your IT infrastructure up to the task?
There are key considerations surrounding choices over information technologies, and quality standards for data accessibility, availability and integrity.
Questions to ask yourself:
- Does your current IT infrastructure permit ease of access to IFRS information?
- Can data be obtained by reconfiguring systems appropriately, and at what cost? Over what time frame?
- Can your systems generate, store, and report two sets of financial data, one for IFRS and one for current Canadian GAAP, as required one year prior to cut-over dates?
- How capable are your systems in producing error-free financial statements, under both reporting standards, and what are the implications on your IT environments that support application systems, enabling critical computer operations to satisfy relevant controls in support of significant accounts impacted by IFRS.
Timing and scale of impact as a result of IFRS means reviewing your IT strategy over the near term, identifying constraints in the form of completing strategic initiatives as it relates to existing IT systems projects, consideration given to planning of system changes, and making upgrades in light of the timing proposed by IFRS timelines.
Does your organization have the right people in place?
Making the transition to IFRS is like re-wiring the nervous system of your organization; it’s a complex job that requires the right people with the right experience, training and skill sets. The impact of IFRS reaches far beyond just your accounting department. Organizations must make sure they have the right people across all functional groups to integrate and implement this new standard throughout the enterprise.
Some of the key areas that you should consider when determining your staffing requirements for implement IFRS:
- Strategic financial review & analysis
- Transition planning and project management
- Implementation of new account processes and procedures
- Changes to disclosure and reporting requirements
- IT infrastructure and systems development
- Human resources planning
- Asset management
Speak to one our transformation specialists and learn how Armor People Link is putting great people together with great companies to ensure a smooth and efficient transiton to IFRS.
Give us a call at (905) 567-6855