International Financial Reporting Standards: More Than Accounting Policies

Accenture draws on its experience in helping European companies make this same journey, recommending that organizations look beyond mere compliance to realize more extensive benefits and enable high performance.

In 2011, Canadian companies will have to comply with International Financial Reporting Standards, joining more than 100 countries including the European Union, Australia and New Zealand that have adopted the new standard. Furthermore, all indications are that other major economies are likely to follow suit as IFRS becomes the reporting standard for the global economy.

For example, the US Financial Account Standards Board has indicated its intention to harmonize US Generally Accepted Accounting Principles (GAAP) with IFRS. The US Securities and Exchange Commission is allowing companies to file IFRS statements without an accompanying reconciliation to US GAAP.

Canadian companies—and others moving toward IFRS—must take note that a successful transition to IFRS is a complex undertaking, and will require them to make far-reaching judgments. Accenture’s extensive experience in helping many European companies make the transition shows that IFRS planning ideally begins three to four years before the due date.

The impact of IFRS will be felt well beyond accounting policies. IT systems, data requirements, financial processes, training and management reporting will all have to be changed. However, the adoption of IFRS has clear benefits, including:

• Global financial standards are attractive to investors, as they enable clearer comparisons and benchmarking.
   
• IFRS can provide improved access to capital and ease entry to stock exchanges worldwide. 
  
  
• Adherence to IFRS may potentially reduce capital costs owing to more transparent financial results and reduced risk premiums.
  
  

Accenture’s High Performance Business research strongly indicates that the finance function can deliver new forms of business value. Based on its extensive experience, therefore, Accenture recommends that companies go beyond mere IFRS compliance to realize more extensive benefits.

These added benefits include support for group harmonization, greater consistency in reporting and a more proactive management for all legal entities and other business units. IFRS adoption should also lead to faster provision of financial information and the shortening of financial cycles through automation.

Finance & Performance Management professionals within Accenture draw on the company’s extensive experience to help current clients become IFRS-compliant as part of a broader strategy to achieve high performance.

Accenture’s approach begins with an impact assessment. The company recommends that clients plan a highly collaborative, multiyear effort involving multiple internal and external business partners. Beyond technical accounting, companies will need a diverse range of resources to handle all the process and technology issues that will arise. People issues, too, will need professional attention. Overall, top-notch program management is a must.

For Canadian companies in particular, Accenture recommends accelerating the process. These next few years provide a real opportunity for Canadian companies to optimize their finance functions around integrated, highly accurate processes—and so make good progress toward high performance.