This document discusses considerations for American executives regarding switching from U.S. GAAP financial reporting to International Financial Reporting Standards (IFRS). For small and medium enterprises operating globally, moving to IFRS may make business easier by aligning them with international trading partners and competitors. While some U.S. companies question the need to adopt IFRS, global convergence of standards is occurring, and not adopting IFRS could put companies at a disadvantage. CIOs should also care about a potential GAAP to IFRS transition because it could significantly impact IT systems and require changes to systems of record, calculations, and data requirements as well as capital investments. The document outlines some key IT considerations around systems, business processes,

1. OPERATING IN A GLOBAL ENVIRONMENT
CIO CONSIDERATIONS
Technology Executive Roundtable
Feb 2012, Burbank, CA
Facilitator: Barry M. Cole

2. American executives should assess switching financial
reporting to IFRS. For many enterprises, especially those within
the SME space, moving to IFRS may be a right answer.
GAAP to IFRS
U.S. Technology Discussion

3. Overview: What is IFRS
• International Financial Reporting Standards (IFRS)
are principles-based standards, interpretations and the
framework (1989) adopted by the International
Accounting Standards Board (IASB).
• A major difference between US GAAP and IFRS is the fact that
three fundamentally different concepts of capital and capital
maintenance are authorized in IFRS while US GAAP only
authorize two capital and capital maintenance concepts during
low inflation and deflation.
• The relevant boards, FASB and IASB have committed to
converging IFRS and U.S. GAAP and have made significant
strides toward that goal.
• The SEC has also explored giving U.S. issuers the option to file
their financial statements in accordance with IFRS.

4. The American Environment & IFRS
If you operate within the SME space: Ask your senior financial manager
about IFRS and you will most likely get one of two responses: “Why
would we want to consider IFRS?” or “I have not paid attention to IFRS.”
These are legitimate responses with a fairly simple reply:
• In an increasingly smaller global economy, countries worldwide have
adopted or are adopting IFRS. If you have overseas subsidiaries or
business entities, or you do business with firms outside the U.S., Life is
easier if you are on the same page as trading partners and even
competitors (remember market analysts as well as governments and
money sources like common reporting standards and recognition).
• Jim Turley, CEO of Ernst & Young, has said, “Imagine the Soccer World
Cup being played in South Africa this year and teams played by
different rules.” That is a concern in a world economy where the U.S.
continued using GAAP and attempting to engage in business where
everyone else has adopted or is close to adopting IFRS.

5. Why Would A CIO Care About IFRS
In many organizations business process change, systems of
record decisions, and project management are all ultimately
within the charter of the CIO.
• In the U.S. all publically traded companies are required to comply
their financials to GAAP. As GAAP and IFRS converge occurs or if
pure IFRS is needed for non-US operations – IT maintained
systems of record or report must support this accommodation.
• A multitude of exempt enterprises including Startups, SMEs, and
even NFPs have adopted GAAP compliance for a multitude of
reasons. Among these:
• Investors often require early stage companies to recognize revenues
based on GAAP standards.
• Middle market companies are commonly required by line-of-
credit/lockbox providers to maintain records conformed to GAPP.
Privately held startups may want to consider IFRS. Unlike
GAAP; IFRS has a dedicated standard “IFRS for Small and
Medium Entities” standard providing the full set of accounting
rules to comply when preparing financial statements.

6. American IT Impacts
• Over the next few years IFRS convergence can be
expected have a significant impact on IT systems of many
organizations and related enterprise budgets.
• As global organizations move toward convergence of
financial standards, changes to IT systems will require
astute planning and potentially extensive capital
investments to address reporting, calculations and a range
of new data requirements.
• IT systems issues arising from IFRS convergence should
to be addressed within the near team in order to have the
necessary programming and systems in place to meet the
requirements of the standards.

7. Some IT Considerations - GAAP to IFSR
Systems Level
• Will you move to new systems of record (ERP or stand-alone)?
• How will you address your historic data?
• How will you prevent data input errors during the transitioning?
• Do you a have a knowledgeable Partner for the conversion?
• How will you address calculating incremental depreciation
expense for your opening balance sheet assets?
• Does your existing system limit the total number of fixed-asset
records?
Business Process
• If you have multiple financial or fixed-asset systems, how do
you conform them at a process level (consider existing staff)?
• Will fixed asset componentization affect your companies
repairs and maintenance policies, reports, contracts… ?

8. Experiences & Discussion