With backing from the SEC, the International Organization of Securities Commissions, and the International Accounting Standards Board, IFRS will soon be a mandatory requirement for businesses in every country. To date, more than 12, 000 companies in over 100 countries have adopted IFRS. The EU began adopting IFRS in 2005, with Canada to join the list in 2011 and the United States in 2014.
Although only a financial reporting standard, IFRS will surely affect every aspect of your company. As stated by the American Institute of Certified Public Accountants, “[IFRS]… will have an impact far beyond just financial reports. It will affect almost every aspect of a company’s operations, everything from its information technology systems, to its tax reporting requirements, to the way it tracks stock-based compensation.”
Assessing IFRS Impact - Beyond Financial Accounting and Reporting
IFRS will pose some unique challenges, as illustrated below, to key internal stakeholders, notably – Strategic Management, Finance and Accounting, Treasury, Human Resources and Information Technology.
Strategic Management
Finance & Accounting
Treasury
Human Resources
Special Consideration – Impact on IT Control Environment
IFRS transition will mean an impact on your current internal control over financial reporting and process documentation. Necessarily, control activities and risks of ‘what could go wrong’, may change, as a result of accounting and systems changes.
Consequently, 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?
1. Can data be obtained by reconfiguring systems appropriately, and at what cost? Over what time frame?
2. 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?
3. 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 competing 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.
