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ACC 626 IFRS Implications on IT
ACC 626 IFRS Implications on IT
ACC 626 IFRS Implications on IT
ACC 626 IFRS Implications on IT
ACC 626 IFRS Implications on IT
ACC 626 IFRS Implications on IT
ACC 626 IFRS Implications on IT
ACC 626 IFRS Implications on IT
ACC 626 IFRS Implications on IT
ACC 626 IFRS Implications on IT
ACC 626 IFRS Implications on IT
ACC 626 IFRS Implications on IT
ACC 626 IFRS Implications on IT
ACC 626 IFRS Implications on IT
ACC 626 IFRS Implications on IT
ACC 626 IFRS Implications on IT
ACC 626 IFRS Implications on IT
ACC 626 IFRS Implications on IT
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ACC 626 IFRS Implications on IT

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International Financial Reporting Standards (IFRS) implementation is a hot topic for every public company due to the significant impact it has on the company's overall operations and financial …

International Financial Reporting Standards (IFRS) implementation is a hot topic for every public company due to the significant impact it has on the company's overall operations and financial reporting system. This slidecast will discuss the IFRS implications with a focus on information technology; beginning with a brief discussion on the objective of IFRS, common issues with IFRS adoption, the related control implications, the impact on the accounting profession, and some advices for future adopters.

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  • 1. IFRS Implications on IT<br />ACC 626 Section 2<br />Presented by: Madeline Chiu<br />
  • 2. Agenda<br />What is IFRS?<br />Common issue with IFRS conversion<br />IFRS implications on IT<br />Control implications <br />Impact on the accounting profession<br />Takeaways<br />
  • 3. What is International Financial Reporting Standards (IFRS)?<br />A set of global accounting standards developed by the International Accounting Standards Board to replace various local GAAP around the world<br />Objective is to increase comparability across global companies<br />Canadian public companies required to adopt IFRS by January 1, 2011<br />
  • 4. Issue with IFRS implementation<br />Many companies do not recognize that IFRS implementation is beyond applying changes to accounting policies<br />In addition to accounting, IFRS also impacts a company’s operations, IT systems, tax reporting systems, and internal reporting systems<br />
  • 5. IFRS Implications on IT <br />The IT system is the backbone of financial reporting<br />Complex changes must be made to the IT system to accommodate for the differences in data collection, calculation and note disclosure<br />Surveys have revealed that approximately 50% of total cost of IFRS conversion are IT-related costs<br />Many European companies admitted that the implications of IFRS on IT were rarely considered in the planning process<br />
  • 6. Manual Approach - Spreadsheets<br />Inherent weakness of spreadsheets:<br />Absence of internal control since the spreadsheets does not undergo the system development life cycle<br /> Usually created by accounting/ finance personnel <br />Spreadsheets could easily become unmanageable <br />Prone to human error<br />
  • 7. Successful implementation requires.... <br />Planning is critical<br />Identify accounting differences between IFRS and local GAAP<br />Assess how accounting gaps affect the IT system and the respective business process<br />Other consequences of the manual approach<br />Failure to meet reporting deadline<br />Producing financial statements with material misstatements<br />Needs top management support<br />Establish a program management team<br />Prioritization<br />
  • 8. Factors affecting magnitude of IT impact<br />Industry company is in<br />Size and complexity of entity<br />Its approach to IFRS adoption<br />Current system capabilities<br />Number of systems used<br />Extent of integration between systems<br />
  • 9. IFRS Implications on IT<br />Differences between IFRS and local GAAP will affect one/more dimension of IT architecuture:<br />Upstream systems – Financial sub-ledgers, financial instrument systems, product specific systems <br />Data warehouse <br />General ledger – Chart of accounts<br />Downstream systems – Financial reporting system, management reporting system, tax reporting system<br />
  • 10. Reconfigure versus Replace<br />Considerations:<br />Whether the legacy system has the capacity and processing power to handle the large volume of traffic<br />Age of the current system <br />Current capabilities and its flexibilities  Is there dual reporting capabilities?<br />Ability to grow with the company<br />
  • 11. Control Implications of IFRS<br />Control may be undermined due to volume of changes and the magnitude of changes to IT systems in relatively short timeframe <br />Adequate internal control and change management in place to create a strong control environment<br />Formal process for approving accounting and/or IT system changes <br />Formal training provided to all affected employees <br />Proper segregation of duties<br />Documentation of changes made to IT system and business processes<br />
  • 12. Impact on the Accounting Profession<br />Auditors required to assess whether financial statements are free of material misstatement<br />Need to perform testing of controls over IT system to determine reliability of financial information<br />Internal auditors<br />Ensure existence and effectiveness of internal control over the conversion process and financial reporting process<br />Review IT and business process changes<br />Identify control deficiencies and <br /> provide recommendations <br />
  • 13. Current Issues<br />Dual reporting requirements <br />Many companies would be required to maintain two sets of books: IFRS and local GAAP <br />IT system with dual reporting capabilities could help maintain two sets of books without duplicate effort<br />Extensive Business Reporting Language (XBRL)<br />Useful tool for companies transitioning to IFRS<br />Convergence Assistant – allow companies to upload their trial balance, map company’s trial balance to a standard set of accounts, and create two sets of financial statements (IFRS and local GAAP) <br />
  • 14. Takeaways <br />Plan<br />Prioritize<br />Collaborate<br />Ensure top management dedication<br />Involve the right people and retain them <br />Reflect back to SOX and Bill 198 implementation<br />Try to integrate ongoing IT projects with IFRS conversion<br />View IFRS adoption as an opportunity to improve operations and the financial reporting process<br />
  • 15. Work Cited<br />American Institute of CPAs. (2010). Financial System Considerations in IFRS Conversion Projects. Retrieved May 17, 2011, from American Institute of CPAs: http://www.ifrs.com/pdf/10414-378_IFRS_IT_White_Paper_WEB_FINAL.pdf<br />American Institute of CPAs. (2011). IFRS FAQs. Retrieved June 10, 2011, from AICPA IFRS Resources: http://www.ifrs.com/ifrs_faqs.html#q3<br />Anton B Van Wyk, David G Taylor, &amp; Russell A Jackson. (2004). welcome to the new world of accounting. The Internal Auditor, 61(6), 42-47.  Retrieved May 26, 2011, from ABI/INFORM Global. (Document ID: 780420971).<br />Arnold, S. (2009, September). IFRS Risk Planning and Control Execution. Retrieved May 18, 2011, from Journal of Accountancy: http://www.journalofaccountancy.com/Issues/2009/Sep/20091594.htm<br />Auditing and Assurance Standards Board. (2008, May 5). Assurance Reports on Controls. Retrieved June 18, 2011, from Auditing and Assurance Standards Board: http://www.aasbcanada.ca/documents-for-comment/item16760.pdf<br />Baston, R. (2009). Evaluating the Potential Technology Impact of IFRS. Retrieved May 17, 2011, from ISACA Journal: http://www.isaca.org/Journal/Past-Issues/2009/Volume-4/Documents/jpdf094-evaluating-the-potential.pdf<br />Bhengu, X.. (2011, February). New accounting standards. This may hurt a bit. Financial Mail. Retrieved May 21, 2011, from Factiva, Inc. (Document ID: AIWFIM0020110211e72b00028).<br />Brown, W. C. (2011, May 16). Are You Ready for an IFRS Conversion? Retrieved May 15, 2011, from ISACA Journal: http://www.isaca.org/Journal/Blog/Lists/Posts/Post.aspx?ID=63<br />Brozovsky, J., Christie, N., &amp; Hicks, S.. Accounting for Small Businesses: The Role of IFRS. The CPA Journal, 80(7). Retrieved May 2011, 2011, from Factiva, Inc. (Document ID: CPAJ000020100724e6710000a).<br />Carey, D.. (2008, June). Don&apos;t get caught out on IFRS. CIO Canada, 16(6), 1  Retrieved May 26, 2011, from CBCA Complete. (Document ID: 1692777081).<br />Chan, G., &amp; Du Plessis, S. (September). IFRS Impact on Internal Control Compliance. Retrieved May 20, 2011, from 2010: http://iia2010bc.com/presentation_pdfs/Track-5_Emerging_Issues/T5-1_IFRS_Impact_on_Internal_Control_Compliance.pdf<br />Charatered Accountants of Canada. (2009). ITAC InfoCast - IT&amp;IFRS: The European Experience Part 2. Retrieved May 18, 2011, from SlideShare: http://www.slideshare.net/itacinfocast/itac-infocast-itifrs-european-experts-part2of2<br />Chartered Accountants of Canada. (2009). ITAC InfoCast - IT&amp;IFRS: The European Experience Part 1. Retrieved May 18, 2011, from SlideShare: http://www.slideshare.net/itacinfocast/itac-infocast-itifrs-the-european-experience<br />Daughton, M.. (2009, August). IT Aspects of IFRS Conversion: A Question of Intent. Accountancy Ireland, 41(4), 32.  Retrieved May 24, 2011, from ABI/INFORM Global. (Document ID: 1905024221).<br />DeFelice, A.. (2010). Technology Considerations for Converting to IFRS. Journal of Accountancy, 209(4), 26-28,8.  Retrieved May 26, 2011, from ABI/INFORM Global. (Document ID: 1993528761<br />Deloitte; IFRS Adoption Gaining Momentum, but U.S. Companies Need More Preparation and Education: Deloitte Survey. (2008, June). Real Estate &amp; Investment Week,228.  Retrieved May 26, 2011, from ABI/INFORM Trade &amp; Industry. (Document ID: 1517136461).<br />Reporting System for U.S. Issuers. Retrieved May 27, 2011, from U.S. Securities and Exchange Commission: http://www.sec.gov/rules/other/2010/33-9109.pdf<br />
  • 16. Work Cited<br />Deloitte Consulting LLP. (2011). IAS 39 Financial Instruments: Recognition and Measurement. Retrieved June 20, 2011, from IAS Plus: http://www.iasplus.com/standard/ias39.htm<br />Deloitte Consulting LLP. (2011). IFRS 7: Financial Instruments: Disclosures. Retrieved June 20, 2011, from IAS Plus: http://www.iasplus.com/standard/ifrs07.htm<br />Deloitte Consulting LLP. (2008). IFRS Conversion: Process, People, Controls, Governance and Technology Implications. Retrieved May 21, 2011, from Deloitte: http://www.deloitte.com/view/en_US/us/article/ed9abf316920e110VgnVCM100000ba42f00aRCRD.htm<br />Deloitte Consulting LLP. (2008). Technology implications of IFRS . Retrieved May 17, 2011, from Deloitte IAS Plus: http://www.iasplus.com/usa/0808ifrstechnology.pdf<br />Deloitte Consulting LLP. (2008). The Path to IFRS Conversion: Consideration for the Banking and Capital Markets Industry. Retrieved May 15, 2011, from Deloitte IAS Plus: http://www.iasplus.com/dttpubs/0811ifrsbanking.pdf<br />DiBrienza, M. (2010, December). Practical adoption of IFRS. Retrieved May 30, 2011, from New York Hedge Fund Roundtable: http://www.newyorkhedgefundroundtable.org/documents/RK_WallStreetArgus_12_10_AdoptIFRSF.pdf<br />Dickins, D., &amp; Cooper, B.. (2010, November). IFRS: A SUMMARY AND UPDATE. Internal Auditing, 25(6), 34-40.  Retrieved May 26, 2011, from ABI/INFORM Global. (Document ID: 2218309241).<br />Ernst &amp; Young. (2009). Inside IFRS The opportunity for IT. Retrieved June 3, 2011, from Ernst &amp; Young: http://www.ey.com/Publication/vwLUAssets/Inside_IFRS_opportunity_IT_July09/$FILE/Inside_IFRS_opportunity_IT_July09.pdf<br />Gannon, D.. (2008, November). International Financial Reporting Standards for US Companies: Planning for Adoption. The Corporate Governance Advisor, 16(6), 5-10.  Retrieved May 26, 2011, from ABI/INFORM Global. (Document ID: 1603704221).<br />Heffes, E.. (2009, May). IFRS Provides Opportunity to Transform Functions. Financial Executive, 25(4), 12.  Retrieved May 26, 2011, from ABI/INFORM Global. (Document ID: 1717657841).<br />IFRS Foundation. (2011). International Accounting Standard 16 Property, Plant and Equipment. Retrieved June 20, 2011, from IFRS Foundation: http://eifrs.iasb.org/eifrs/bnstandards/en/ias16.pdf<br />Institute of Chartered Accountants of Ontario. (2011). Chi Ho Ng , CA, CPA (IL), MBA. Retrieved Junw 20, 2011, from Chartered Accountants of Ontario: http://www.icao.on.ca/Public/FindaCASpkr/SpkrProfiles/SpkrBios/1009page5851.aspx<br />Jeffrey, G.. (2007, October). IFRS - reporting standards in transition. CMA Management, 81(6), 22-23,25-27.  Retrieved May 26, 2011, from ABI/INFORM Global. (Document ID: 1413432231).<br />John Van Decker.  (2010, December 8). Study shows changes to the CFO view of technology. Financial Times,4.  Retrieved May 26, 2011, from ABI/INFORM Global. (Document ID: 2207416651).<br />
  • 17. Work Cited<br />King, A.. (2010, May). Fair value is coming! Fair value is coming!. Accounting Today, 24(5). Retrieved May 20, 2011, from Factiva, Inc. (Document ID: ACTODY0020100511e65a0000x).<br />KPMG International. (2010, January 12). The Impact of IFRS on Technology - A Practical Introduction. Retrieved May 25, 2011, from US KPMG Institutes: http://www.kpmginstitutes.com/ifrs-institute/insights/2010/pdf/the-impact-of-ifrs-on-technology.pdf<br />KPMG LLP. (2009, April). IFRS Implications: Implications for CEO and CFO Certifications. Retrieved May 21, 2011, from KPMG: http://www.kpmg.com/Ca/en/IssuesAndInsights/ArticlesPublications/Documents/IFRS%20Conversion%20-%20%20Implications%20for%20CEO%20and%20CFO%20Certificiations.pdf<br />KPMG LLP. (2009). Overseeing IFRS Transition - Implications for CEO/CFO control certifications. Retrieved June 1, 2011, from KPMG : http://www.kpmg.com/Ca/en/IssuesAndInsights/ArticlesPublications/Documents/ACUpdate_2009-01_IFRSandICFR_Reprint.pdf<br />KPMG LLP. (n.d.). The Effects of IFRS on Information Systems. Retrieved June 18, 2011, from Technology Executives Club: http://www.technologyexecutivesclub.com/Articles/management/ifrs.php<br />Kuczynski, R.. (2009, December). No easy task. CA Magazine, 142(10), 46-48.  Retrieved May 26, 2011, from ABI/INFORM Global. (Document ID: 1921371701).<br />Lobingier, P., &amp; Green, B.. (2008, November). MIGRATING FROM U.S. GAAP TO IFRS: LESSONS FROM THE EU AND CANADIAN EXPERIENCE. Internal Auditing, 23(6), 3-8,10,12,14.  Retrieved May 26, 2011, from ABI/INFORM Global. (Document ID: 1622270881).<br />Macdonald, D., (2004, June). South Africa; Financial Reporting Standards Compliance - How Technology Can Help. Africa News. Retrieved May 17, 2011, from LexisNexis Academic.<br />McCann, D.. (2010, January) The IFRS-IT Connection. CFO.com. Retrieved 17, 2011, from LexisNexis Academic. <br />Mladenovic, L. (2010, September). IFRS – Control &amp; Oversight Implications. Retrieved May 15, 2011, from CCH Canadian: http://www.cch.ca/newsletters/TaxAccounting/September2010/Article4.htm<br />Ng, C.H. (2010, December). Now&apos;s the time. CA Magazine, 143(10), 39-40.  Retrieved May 26, 2011, from ABI/INFORM Global. (Document ID: 2213238681).<br />Ng, C. H. (2008, November). Assurance issues. Retrieved May 20, 2011, from CA Magazine: http://www.camagazine.com/archives/print-edition/2008/nov/regulars/camagazine4266.aspx<br />Paquette, H. C. (2009, September 23). IFRS and the Key Effects of Information System. Retrieved May 21, 2011, from ISACA - Kettle Moraine: http://www.isaca-km.org/meetings%5C09-23-09_ISACA_IFRS_Presentation.pdf<br />
  • 18. Work Cited<br />Posten, D.. (2008, September). A big deal? CA Magazine, 141(7), 57-60.  Retrieved May 26, 2011, from ABI/INFORM Global. (Document ID: 1554991661).<br />Pratt, M.. (2010, February). GET READY FOR GLOBAL ACCOUNTING. Computerworld, 44(3), 21-23.  Retrieved May 26, 2011, from ABI/INFORM Global. (Document ID: 1993542471).<br />PricewaterhouseCoopers. (n.d.). IFRS: Our approach: TransitionIFRS Methodology. Retrieved May 26, 2011, from PricewaterhouseCoopers: http://www.pwc.com/ca/en/ifrs/transitionifrs-methodology.jhtml<br />Robert Fabiszak.  (2009, March). A Catalyst For Improvement: The IFRS Center of Excellence. Business Performance Management Magazine, 7(1), 16.  Retrieved May 26, 2011, from ABI/INFORM Global. (Document ID: 1749328611).<br />Royce D Burnett, Mark Friedman, &amp; Uday Murthy. (2010, July). IT: What&apos;s the Impact of IFRS? The Journal of Corporate Accounting &amp; Finance, 21(5), 15-21.  Retrieved May 24, 2011, from ABI/INFORM Global. (Document ID: 2079830651).<br />Sagafi-Nejad, T., Smith, L., Byrne, S., Gaskins, L., Nguyen, Z., &amp; Sexton, S.. (2010, January). MOVING TOWARD IFRS IN NORTH AMERICA. Internal Auditing, 25(1), 3-9.  Retrieved May 26, 2011, from ABI/INFORM Global. (Document ID: 1983914101).<br />Safavi, M., &amp; Parkinson, N.. (2009, February). Converting IFRS into I.T. Canadian Underwriter, 76(2), 22,24.  Retrieved May 24, 2011, from ABI/INFORM Global. (Document ID: 1727439881).<br />Schick, S.. (2009, March). FAQ: PREPARING for IFRS. ComputerWorld Canada, 25(6), 15-16.  Retrieved May 26, 2011, from CBCA Complete. (Document ID: 1806824441).<br />Skorstengaard, S., &amp; MacDonald, K. (2009, November). Who’s managing risks? Retrieved May 18, 20, from CA Magazine: http://www.camagazine.com/archives/print-edition/2009/nov/regulars/camagazine30924.aspx<br />Steele, D. (2009). The IT implications . Retrieved May 17, 2011, from Grant Thornton: http://www.grantthornton.ca/resources/insights/TLs/IT_implications_of_IFRS.pdf<br />The Canadian Institute of Chatered Accountants. (2011). Canadian Auditing Standard 200 Overall Objective of the Independent Auditor and the Conduct of an Audit in Accordance with Canadian Auditing Standards. In CICA Handbook - Assurance 2011 Edition. The Canadian Institute of Chatered Accountants.<br />The Chartered Accountants of Ontario. (2011). CommuniCAtor Profile. Retrieved June 27, 2011, from The Chartered Accountants of Ontario: http://www.icao.on.ca/Public/FindaCASpkr/SpkrProfiles/SpkrBios/1009page5851.aspx<br />Trites, G.. (2009, September). The top ten IT issues. CA Magazine, 142(7), 20-25,27.  Retrieved May 25, 2011, from ABI/INFORM Global. (Document ID: 1861878271).<br />U.S. Securities and Exchange Commission. (2010, February 24). Work Plan for the Consideration of Incorporating International Financial Reporting Standards into the Financial<br />

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