Finance and Accounting                International Financial Reporting Standards – What Are                      They and...
personnel accordingly. If there are system changes required (for example, for revisions to revenuerecognition software), w...
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International Financial Reporting Standards – What Are They and How Do They Impact Our Clients

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International Financial Reporting Standards – What Are They and How Do They Impact Our Clients?

What is IFRS - Why the change to IFRS - How does it mean for our clients - Heading down the condorsement path - 360 degree intelligence delivery and condorsement.

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International Financial Reporting Standards – What Are They and How Do They Impact Our Clients

  1. 1. Finance and Accounting International Financial Reporting Standards – What Are They and How Do They Impact Our Clients? By Wade Lindenberger Finance and Accounting Services Leader January 2012What Is IFRS? International Financial Reporting Standards (also known as “IFRS”) are constantly in the news. Whatare they? The simplest explanation is that IFRS represents the financial reporting and accountingstandards followed by most of the rest of the world and is comparable to the Generally AcceptedAccounting Principles (“GAAP”) followed in the U.S.Why the Change to IFRS?In theory, the U.S. Securities and Exchange Commission (“SEC”) wants U.S. companies to follow IFRS sofinancial statements are easier to compare to those of companies in other countries, easing the way forU.S. companies to enter and compete in international capital markets. In practice, the SEC is havingtrouble relinquishing U.S. GAAP and the path to the adoption of IFRS has been slow and tortured.Instead of the wholesale adoption of IFRS touted by the SEC a few years ago, the SEC now wants to workwith the International Accounting Standards Board (or “IASB”), the body responsible for IFRS, to“converge” U.S. GAAP with IFRS standard by standard, a process that could, and most likely will, takeseveral years.How Does It Mean for Our Clients?A few years ago, companies faced an expensive process to transition to IFRS, as all aspects of IFRS wererequired to be implemented at a single point in time. Now, clients can focus on understanding andimplementing individual accounting standards as they are “converged” with IFRS.Heading Down the Condorsement Path“Condorsement” is the new buzzword coined to describe this new approach. According to the workplan issued by the Office of the Chief Accountant, “The gradual transition of existing standards to IFRScould increase the opportunities for successful transition by decreasing the severity of the IFRS learningcurve.” In any event, the SEC has targeted specific standards for condorsement in the near future,among them leasing and revenue recognition, so clients can follow developments, educate themselveson the proposed changes and implications for their companies and implement each new standard asrequired. When it comes down to it, this approach is not all that different from the way U.S. companieshave always implemented new U.S. GAAP standards.360° Intelligence Delivery and Condorsement – A Perfect FitOur 360° Intelligence Delivery approach enables us to collaborate with our clients as IFRS continues tounfold. We intend to keep our clients updated on significant developments, standard by standard. Wecan help them understand the implications of each standard, from the identification of how it changestheir current accounting and financial reporting to how the new standard can be implemented. We canalso help them update their policies, procedures and internal control documentation and train their
  2. 2. personnel accordingly. If there are system changes required (for example, for revisions to revenuerecognition software), we can support that as well. The most important first step is to let our clientsknow we are there as an advisor. Once they recognize that, we can start to collaborate with them andbe an equal partner as they go through the process.

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