Although IFRS adoption in the US is still a few years away (according to the last SEC proposal: 2014 for large accelerated filers, 2015 for accelerated filers, and 2016 for non-accelerated filers and smaller companies), some US-based issuers may have the opportunity to report financials using IFRS standards sooner, depending on their industry and relative market share. Still, the SEC has not made its final decision and won’t until at least 2011, though it has renewed its commitment to move forward with adoption. View the original Blog post: http://www.eprentise.com/blog/financial-standards/if-ifrs-then-part-1-how-ifrs-reporting-will-impact-filers/ Website: www.eprentise.com Twitter: @eprentise Google+: https://plus.google.com/u/0/+Eprentise/posts Facebook: https://www.facebook.com/eprentise Ensure your data is Complete, Consistent, and Correct by using eprentise software to transform your Oracle® E-Business Suite.

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If IFRS…Then, Part 1:
How IFRS Reporting Will Impact Filers
an eprentise white paper

2. If IFRS…Then, Part 1: How IFRS Reporting Will Impact Filers
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© 2014 eprentise, LLC. All rights reserved.
eprentise® is a registered trademark of eprentise, LLC.
FlexField Express and FlexField are registered trademarks of Sage Implementations, LLC.
Oracle, Oracle Applications, and E-Business Suite are registered trademarks of Oracle Corporation.
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Author: Helene Abrams
Published: June 16, 2010
www.eprentise.com

3. If IFRS…Then, Part 1: How IFRS Reporting Will Impact Filers
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Although IFRS adoption in the US is still a few years away (according to the last SEC proposal: 2014 for
large accelerated filers, 2015 for accelerated filers, and 2016 for non-accelerated filers and smaller
companies), some US-based issuers may have the opportunity to report financials using IFRS standards
sooner, depending on their industry and relative market share. Still, the SEC has not made its final
decision and won’t until at least 2011, though it has renewed its commitment to move forward with
adoption.
Nevertheless, outstanding issues that are not yet resolved – and may not be before the various deadlines
– will affect filers, contributing to the chaos and confusion of any significant transition in reporting
requirements.
For example, IFRS does not yet have standards for the treatment of insurance contracts, recapitalization
transactions, extractive activities, some common control transactions, reorganizations, and other similar
transactions. Also, IFRS permits various accounting practices based on local standards, something the SEC
seeks to eliminate. But even today U.S. GAAP also does not have a single standard for property, plant, and
equipment or even revenue recognition.
In addition there are known differences between U.S. GAAP and IFRS. For example, IFRS does not permit
accounting for inventory on a LIFO basis and instead requires FIFO which could impact taxable income
based on differences in inventory valuation using the two methods.
Complications would also impact companies that invest in entities that don’t report using IFRS or private
companies planning an IPO that need to switch to IFRS from a different standard. And companies that do
not operate globally will be challenged to adopt IFRS both for financial reporting and auditing, e.g.
reporting on the effectiveness of internal controls over financial reporting (SOX Section 404).
The SEC has asked for comments to help it assess two alternative reconciliation proposals, neither of
which has yet been selected. The first proposal would require a one-time reconciliation from U.S. GAAP to
IFRS1, whereas reconciliation in the second proposal would cover a three-year period. If option 2 is
approved, large accelerated filers would need to reconcile 2012 – 2014, accelerated filers would reconcile
2013 – 2015, and non-accelerated filers would reconcile 2014 – 2016. In effect the companies would need
to issue two sets of reports in each of the three years, one set following U.S. GAAP rules the other set
using IFRS standards. Of course, some large global companies may already have to report using both.
Depending on company size and the number of times reconciliation disclosure is required, the SEC
estimates modest costs for the IFRS roll-out, anywhere from 0.125% to 0.13% of revenue, a number that is
expected to drop over time. However, if the SEC’s SOX compliance estimates are used as a predictor, then
their cost estimates for adopting IFRS are much too low.
Although the SEC decision is not expected until 2011, the time to prepare for what appears to be an
inevitable future is now. The difficulty and complexity in IFRS reporting will only be exacerbated for
organizations that frequently acquire other companies, frequently reorganize, or have different charts of
accounts (COAs) for various business entities. It stands to reason that compiling period-end reports for
them is already difficult and will only be more so as U.S. GAAP rules morph into IFRS standards.
At the very least, organizations should move toward adopting a single COA for all business entities. At a
minimum this will mean that all of the convoluted mapping during period-end consolidation will be

4. If IFRS…Then, Part 1: How IFRS Reporting Will Impact Filers
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minimized, if not completely eliminated, along with the myriad spreadsheets consumed in the effort. IFRS
compounds the issue for U.S. filers accustomed to following rules by establishing standards and not
publishing a recommended COA. The sky is the limit, or so it seems. But adopting a COA that can
accommodate various lines of business in different countries and industries is not an insurmountable task
if best practices are followed. The question then becomes, what are those best practices?
In If IFRS…Then, Part 2 we share best practices in COA design.
Curious?
For more information, please call eprentise at 1.888.943.5363 or visit www.eprentise.com.
About eprentise
eprentise provides transformation software products that allow growing companies to make their Oracle® E-Business
Suite (EBS) systems agile enough to support changing business requirements, avoid a reimplementation and lower the
total cost of ownership of enterprise resource planning (ERP). While enabling real-time access to complete, consistent
and correct data across the enterprise, eprentise software is able to consolidate multiple production instances, change
existing configurations such as charts of accounts and calendars, and merge, split or move sets of books, operating
units, legal entities, business groups and inventory organizations.

5. If IFRS…Then, Part 1: How IFRS Reporting Will Impact Filers
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