Looming IFRS Risks Pose Significant Challenges

More and more companies are beginning to examine the potential impact of the imminent conversion from U.S. Generally Accepted Accounting Principles ("GAAP") to the International Financial Reporting Standards ("IFRS").  The big difference between the two sets of standards is the fact that GAAP is primarily "rules-based", while IFRS is "principles-based".  The nature of a more principles-based set of standards adds to the amount of interpretation and risk in financial reporting.   Here is what an article in September 2009 issue of the Journal of Accountancy recently noted on the emerging risks from IFRS implementation.

Conversion to IFRS will be far more than a technical accounting exercise. Implementing IFRS will impact many, if not all, aspects of your business operations. It may bring companywide changes that will spawn new risks. These include system changes, modifications to processes impacting employees’ day-to-day duties, and new accounting policies.

Companies will also need to evaluate the impact these differences may have on their accounting policies, as well as the underlying information technology systems that support the company’s financial reporting structure. Changes to policies and systems on this scale will invariably give rise to additional risks that your organization may need to monitor and control.

The move to IFRS represents a huge opportunity for global companies to streamline their financial reporting, while at the same time poses major risks in the quality of implementation across the organization.  Wheelhouse Advisors can help your company analyze the IFRS related risks and provide solid expertise to support a successful implementation. Visit www.WheelhouseAdvisors.com to learn more.