2009 brought with it a deep financial crisis and a decision by the global accounting boards to standardize accounting functionality for global companies. The decision followed a joint meeting of the US Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) during which the parties agreed to make their financial reporting standards compatible and a commitment to standardize financial reporting beginning this year - 2011. The financial crisis exacerbated the urgency of making the changes. View the original Blog post: http://www.eprentise.com/blog/financial-standards/moving-from-gaap-to-ifrs-with-oracle-ebs/ 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.

1. tel: 407.591.4950 | toll-free: 1.888.943.5363 | web: www.eprentise.com
Moving From GAAP to IFRS with
Oracle® E-Business Suite
an eprentise white paper

2. Moving From GAAP to IFRS with Oracle® E-Business Suite
Copyright © 2014 eprentise, LLC. All rights reserved. www.eprentise.com | Page 2
© 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.
All other company or product names are used for identification only and may be trademarks of their respective owners.
Author: Helene Abrams
Published: March 13, 2011
www.eprentise.com

3. Moving From GAAP to IFRS with Oracle® E-Business Suite
Copyright © 2014 eprentise, LLC. All rights reserved. www.eprentise.com | Page 3
International Financial Reporting Standards (IFRS)
2009 brought with it a deep financial crisis and a decision by the global accounting boards to standardize
accounting functionality for global companies. The decision followed a joint meeting of the US Financial
Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) during
which the parties agreed to make their financial reporting standards compatible and a commitment to
standardize financial reporting beginning this year – 2011. The financial crisis exacerbated the urgency of
making the changes.
This decision is forcing public companies and even some small and mid-sized companies to undertake
enormously complex convergence activities to move from GAAP to IFRS. There is a great deal of
uncertainty about how to make the change, and potentially a high cost of compliance. The overall
message is clear – all companies are facing a period of regulatory change, but the timetable and
enforcement will vary based on industry, location, and size of the company.
IFRS – Impact on Financial Systems
Generally, there is a wide variation between how companies report profits recorded under IFRS, compared
to the net income using US GAAP. “The difference in net earnings between IFRS and U.S. GAAP, expressed
as a percentage of U.S. GAAP net income, varied from more than plus 80 percent in some industries to
minus 60 percent in others.” [1] This is because IFRS is much more principles-based than US GAAP. That
means that individual companies are left to their own methods to explain the differences in their financial
results and to provide supporting analysis to reconcile their results.
Experts can help distill the important changes that hit pension funds, revenue recognition, bank
covenants, shareholder’s equity, and profits from the minor changes that do not have a material impact,
but if the data is not clear in the underlying financial management systems, the results may be interpreted
differently. In a group finance environment everyone with responsibility for financial (statutory)
accounting needs to be on the same page as early as possible.
The Oracle® E-Business Suite technology issues [2] relate to:
 Chart of Accounts – potentially additional chart of account segments and values to accommodate
the new information to be collected or to trap adjustments and reconciling movements between
IFRS, U.S. GAAP or local GAAP.
 Data collection – specifically the potential need to collect additional or different information for
analysis reflecting the difference in the basis of measurement between IFRS and U.S. GAAP.
 Entity structures – reflecting the possibility of segregating or reorganizing IFRS and U.S GAAP
reporting entities.
 Consolidation structures – similar to the justification for altering the chart of accounts and entity
structures above, but this time at a group level in a consolidated environment rather than in local
entity general ledgers or local instances.
 Reporting – the need to adjust reporting capability to rapidly compare prior years’ results in local
GAAP or U.S. GAAP with IFRS and to capture the adjustments between them, and the need to
maintain transparency by preserving history in the same format everywhere in the enterprise.

4. Moving From GAAP to IFRS with Oracle® E-Business Suite
Copyright © 2014 eprentise, LLC. All rights reserved. www.eprentise.com | Page 4
Within the IFRS guidelines, a single chart of accounts that does not ‘mapping’ or translation table provides
a clear advantage when transitioning to IFRS.
An IT policy based on single EBS instance confers a number of advantages when aggregating financial
results and implementing IFRS including the ability to merge and summarize data without interfaces,
especially if all reporting entities can share the same chart of accounts. On the other hand, a
heterogeneous approach where different parts of an organization can report its results differently, can
lead to significant additional complexity. Mapping from different reporting structures forces the
organization to cope with different data collection tools, interfaces and consolidation engines. This can
severely impact process flows, data quality and ease of reporting. IFRS adjustments, for example, to charts
of accounts, data collection forms and reports may have to be implemented several times in different EBS
instances, business intelligence, consolidation and reporting tools. In general, the more that can be
accommodated within a single instance, the easier it is to implement IFRS.
Facilitating the transition to IFRS in an Oracle E-Business Suite environment
 Review and close down dormant legal entities and unnecessary sets of books that have been allowed
to clutter up the reporting structure.
 Revise the chart of accounts to eliminate complexity. Introduce processes and governance for
compliance with local and legislative changes. Clean up redundancy in values or across segments.
 Reduce physical layers of consolidation, i.e. sub consolidations (regional or divisional) that may have
been a legacy of older systems. This includes consolidating instances (with all the history) to avoid
translations and interfaces among different components of the organization.
 Iron out different accounting policies, such as depreciation, that may have crept into the group but
were masked by materiality levels.
There is no blanket or ‘one-size-fits-all’ approach to the implementation of IFRS, as can be seen from
earlier paragraphs much depends on a group’s particular circumstances, the nature of its business, recent
history, preparedness for change and systems architecture. Nevertheless there are certain key themes to
explore.
Conclusion
The ability to report quickly and flexibly is paramount in the transition to IFRS – not simply to comply with
statutory filings and deadlines but as a tool to prove the integrity of the migration, understand its impact
on earnings releases and assess its effect on key performance indicators.
Since IFRS is principles-based the burden of reporting and communications to shareholders falls squarely
on the shoulders of management and as shown earlier, IFRS can cause significant swings in earnings
compared to U.S. GAAP. So it is vital to use reporting as the basis for ‘teasing’ out the differences between
the two regimes and explaining them away. This is especially important during the earlier transition years
when statutory filings will require comparatives between the two standards to be published.

5. Moving From GAAP to IFRS with Oracle® E-Business Suite
Copyright © 2014 eprentise, LLC. All rights reserved. www.eprentise.com | Page 5
Relying on spreadsheets and non-integrated financial consolidation solutions either between different
parts of the organization or different instances makes IFRS compliance much more complex and
expensive. Superficially, information may seem to flow between parts of the organization but in practice, a
change to one aspect inevitably requires a change to the other – quite often accompanied by skilled IT
intervention and high risk.
The positive side of IFRS is that companies can take a systematic approach to catching up with all of the
tasks that have previously been neglected, such as clearing out redundant chart of account segments and
values, clarifying the organization structure consolidating instances.
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.