The U.S. transition to International Financial Reporting Standards (IFRS) makes sense in today’s global marketplace and seems inevitable, despite the many delays. While some businesses are comfortable in taking a wait-and-see attitude, we’re seeing many global organizations that consider IFRS adoption a current necessity to achieve divisional reporting and visibility across their global organizations. Given the demand for greater regulation, adoption of IFRS may extend beyond publicly traded companies to also include private ones.
Even if you are not ready to implement IFRS today, it makes sense to begin the planning process to avoid potential problems. We’ve all seen what happens when organizations wait too long. Some companies in Canada and Europe that dragged their feet in transitioning to the new standards were scrambling at the end to address unexpected challenges and to meet the deadlines.
Transition to IFRS is a major change management project that will likely impact your operations and require you to make many changes to accounting processes, in capturing source data, structuring the Chart of Accounts and reporting.
So, what should you be thinking about today to prepare for tomorrow? Consider the following questions:
- What new or different base information will need to be gathered?
- What changes need to be made to the Chart of Accounts structure?
- What analysis capabilities will enable clear interpretation and comparison of results?
Beginning the planning process is an important first step. The next blog will cover best practices for transition planning.
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