IFRS Basics

Posted on 06.10.09

IFRS Basics

*Due to constantly changing regulations, please consult your tax and accounting professional for the most up to date information on this and any topic that you research online.

Many U.S. companies are wondering what IFRS will mean to them – the timing of implementation and the changes that will be required.

The SEC has released its road map, which includes 7 milestones for adoption.

1.Improvements in Accounting Standards (evaluated 2008 – 2010)

2.Accountability and Funding of the IASC Foundation (evaluated 2008 – 2010)

3.Improvement in the Ability to Use Interactive Data for IFRS Reporting (evaluated 2008 – 2010)

4.Education and Training (evaluated 2008 – 2010) 
5.

5.Limited Early Use of IFRS Where This Would Enhance Comparability for U.S. Investors (certain U.S issuers may begin using IFRS for fiscal years ending on or after December 15, 2009)

6.Anticipated Timing of Future Rulemaking by the Commission (decision in 2011 on basis of progress of milestones 1-4)

7.Implementation of the Mandatory Use of IFRS (anticipated phased roll out starting in 2014)

In later posts, we will discuss each of these milestones in further detail. The key take-away on timing is that very few U.S. companies will begin implementing IFRS starting in 2009, most will begin implementing closer to 2014 – 2016, depending on the size of the company.

When should planning begin and what will be required to implement IFRS successfully? For most companies, planning for IFRS will take about 3 years. Companies will need to address the following 4 areas:

1.Technical Accounting and Tax,

2.Process and Statutory Reporting,

3.IT Systems, and

4.Organizational Readiness.

A common misconception has been that IFRS will only produce changes in accounting. However, in order to make sure financial statements are in line with IFRS, companies will find that each of the 4 areas above are critical to reaching that goal.

Look for more posts providing details on the 7 milestones, 3 year implementation plans, and the 4 areas of focus required to successfully implement IFRS.

The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.

Posted by: Keiter CPAs

Keiter CPAs is a certified public accounting firm serving the audittax, accounting and consulting needs of businesses and their owners located in Richmond and across Virginia. We focus on serving emerging growth businesses and companies in the financial servicesconstructionreal estatemanufacturingretail & distribution industries and nonprofits. We also provide business valuations and forensic accounting servicesfamily office services, and inbound international services.