Sunday, November 23, 2008

IFRS bits and bites

A reflection on IFRS discussions and events over the last few weeks.

SEC IFRS Roadmap

Discussions have already started around the proposed SEC IFRS Roadmap. The biggest point of contention at the moment is around early adopters. There are strict criteria around which US companies could adopt IFRS early in the USA. Even if your company meets the criteria it will have to disclose US GAAP information until when (or if) IFRS becomes mandatory. In these difficult times where is the incentive to be a guinea pig? Clearly there would be a lot of extra costs. Perhaps those companies where most of their competitors report under IFRS and they are already preparing proforma IFRS numbers? As well, there may be US companies in relationships where most of the members of a corporate group report under IFRS. It will be interesting to see who will step forward.

Planning, Planning, Planning

The importance of having a proper detailed plan to convert to IFRS was emphasized by Gord Heard of the Finance Group in a CICA webinar last Tuesday. I guess you might say planning, planning, planning is to IFRS conversions as location, location, location is to real estate.
If you do not have a proper plan how do you know how far advanced you are? You must also start early so you can identify key issues and who should be involved. Will you have the right individuals in house at the right time, with the right skill sets. Only by planning will you know whether there are gaps in resource requirements to be filled in.
A dynamic plan is essential in avoiding last minute panic attacks and work arounds (although perhaps a few can always be expected).
There are a lot of publications available from accounting firms and others on what constitutes a proper IFRS conversion plan.

Communication with auditors

It will be critical to liaise with your auditors over the period to conversion. There should be no surprises you should check in with your major strategic and tactical IFS conversion considerations.
You need to get an understanding on how much work they can do on your IFRS conversions before independence considerations come into play. It's complex so be sure to ask for an explanation.
One issue that came up at the CICA webinar last week was the need to incorporate audit attestation plans early in your thinking. Kelly Gorman of the Ontario Securities Commission emphasized that companies should ensure they speak with their auditors on the level of attestation they would expect in their first quarter of implementation. For calendar year companies this will be for the quarter ended March 31 2011. There will be an auditor resource crunch in the first quarter of 2011, preparing for the first interim reports under IFRS and the 2010 year ends. Make sure you put your needs in your auditors' timetable early on.

Revenue recognition

Revenue recognition under US GAAP is a minefield. Will it be any simpler under IFRS?
The white paper, "Risk and Complexity in Revenue Reporting under US and International Standards," is available free of charge at The survey was conducted in June and October 2008. In all, responses were accepted from 511 US and 141 International senior finance executives.

Key Performance indicators (KPIs) pre-2011

You will need to look at the potential effect of IFRS conversion on your KPIs. Please read the new CICA study referred to in my post on Friday.

IFRS in the media and publishing industries

KPMG issued a publication dealing with IFRS issues in media and publishing industries. The publication is quite detailed on the accounting issues related to that industry and runs 60 pages.

IFRS — practical issues: accounting strategies for the media and publishing industries is available as a free download from KPMG.

It was originally published in Germany and is translated into English. It will be useful for companies in the industry but of course with the usual caveat that you consider carefully your environment (where you are and where you report)

IFRS Exorcist to speak at IFRS Summit in January

That's me folks! I will be speaking about IFRS considerations related to pensions and employee benefits (other than stock option plans) at an IQPC IFRS Summit in January. Please check it out by visiting my site and clicking on the banner for the event. As a reader of this blog, you are entitled to a 25% discount. You can find the code on my website in news and events or at the banner at the foot of the website for this blog.

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