IFRS Conversion in a global environment
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IFRS Conversion in a global environment

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How to manage IFRS conversions in a global environment

How to manage IFRS conversions in a global environment

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  • Specific ones to PB Employee owned despite hundreds of pages of guidance on 123(R) not sufficient for our program. Pay cash not accrual taxes, resulting from partnership Still sec exempt despite 5,000 shareholders Year end – last Friday, 13 periods, local reporting.tax Similar to previous companies. Multiple Ifrs, gaap, german gaap
  • UK still UK GAAP, PB operates in hundreds of joint ventures. FIN 46 try to explain someone in ME, Asia, even UK or Australia
  • Chart of accts cash and cash equivalents payables Systems, only need to change one
  • FIN 46
  • Accounting standard which we follow - does not make sense, fasb must have had one drink to many - history

IFRS Conversion in a global environment IFRS Conversion in a global environment Presentation Transcript

  • Managing IFRS Conversion In A Global Environment Excerpts from a presentation at NJIT December 11, 2009 Andreas Rothe SVP and Global Controller Parsons Brinckerhoff
  • What to consider: Complexity in Global Organizations
    • Multiple subsidiaries
    • Local statutory reporting requirements
    • Different Rollups (Statutory/Mgmt)
    • Subconsolidations
    • Different local Accounting Standards
      • IFRS
      • Local IFRS Adjustments
      • UK GAAP
      • US GAAP
      • Tax Reporting
      • Year Ends
    • Global US GAAP reporting
    • (excerpt from Sample Org Structure)
  • What to consider: Many parties involved
    • Auditors and Consultants
      • ‘ the next SOX’ ?
    • Tax
      • LIFO (Last in first out) not allowed under IFRS
    • Treasury
      • Hedge Instruments, Debt to Equity Ratios / Covenants
    • Contracts
      • E.g. Consolidation of Entities, Joint Ventures
      • Specific accounting treatments (e.g. Revenue Recognition EITFs)
    • Management
      • Performance Metrics
  • Using IFRS conversion to streamline accounting processes and reduce costs
    • Do you have many different
    • accounting policies ?
    • accounting processes ?
    • financial systems ?
    • Did you ever think of centralizing finance functions ?
    • What did you learn from the SOX Implementation ?
  • Implementing IFRS
    • Centralize
    • Focus on Commonalities
    • Deal with Exceptions
    • Manage the Auditors
  • Centralize
    • Local requirements
      • Most countries now follow IFRS or converge
      • Differences may not be material
      • Subsidiaries may not be public entities outside the US, less stringent requirements
    • Many differences to US GAAP may impact head office only
      • Financial Instruments
      • Liability/Equity
      • Stock Options
    • … or could be managed centrally
      • Accounting for M&A, Divestitures
      • Joint Venture Accounting
  • Focus on Commonalities
    • Modify US GAAP policies only if necessary
    • Usage of same accounting standards make it easier to use
      • same chart of accounts
      • same processes
      • same systems
    • Issue Global Accounting Manual
      • Ensure global uniformity of standards
      • Provide guidelines to staff, auditors etc.
    • Global processes and systems
    • Global consolidation system
  • Deal with Exceptions
    • Major exceptions / changes to be dealt with at head office
      • Less need for training on new standard
      • Possible insight in alternative accounting treatment opportunities
      • More support from external auditors
      • Restrict number of exceptions
      • Most accounting differences with significant impact may only be relevant for head office
      • Infrastructure for valuation services
  • Deal with Exceptions – Cont.
    • Evaluate current accounting policies
      • Major differences between IFRS and US-GAAP
      • Current policies that do not reflect economic reality
      • Current policies that differ from those used by competitors
      • One time chance to change – future changes may be more difficult
    • Additional information necessary from field
      • Disclosures
      • Evaluation of Accounting Treatments (Principle vs. Rule Based)
      • Professional Judgment Documentation
  • Manage the Auditors
    • Challenges of the Principles-based Approach in the US
    • Less detailed guidance to consider
      • More of a focus on the “substance” of transactions
      • Evaluate whether the accounting presentation reflects the “economic reality”
    • More use of professional judgment
    • Impact on risk
    • Possibility of second-guessing by regulators and auditors
      • More of a focus on the “process” around making judgments