Coming Together With Ifrs - Early Steps

By Author: Abhi Kumar
Total Articles: 1
Comment this article

The world over, there is much talk on IFRS and merging of local GAAP to IFRS. The SEC in 2007 eradicated the necessity for the foreign companies from providing a settlement statement between their financial prepared under IFRS to financial in US GAAP. Thus, the SEC finished a major statement in 2007 itself that foreign companies itemized in the US need not change their IFRS prepared financial to financial confirming to US GAAP.

The first foreign company in US to file its financial without reconciliation to US GAAP is Novartis AG when it submitted its Form 20-F on January 28, 2008.

There has been much tinkle since then about IFRS and convergence of US GAAP with IFRS as issued by IASB. This buzz is identical with the buzz that was created when the Sarbanes Oxley Act (SOX) was made compulsory in US in 2002.

It's a known fact that the industry big name in US would have to start reporting their financial under IFRS from 2014 onwards. And once that is done, it would be sooner than later that IFRS mandated financial would become the norm of the day for all the listed companies. At the instant we have understood ...
... the reputation and the insinuation of IFRS in US, let us now understand how companies would approach this new mechanism.

Since it's a new idea, it would be better to involve professionals like Indian CPAs, who would already have experienced the transition procedure (since India is moving to IFRS in 2011) and would have a 3 years' experience in reporting under IFRS.

The transition to IFRS would first need to be broken into 3 steps:

1. Initial Stage: - The professionals would need to know the business as the principal step towards transitioning to IFRS and then outline the space of the work as well as define time period for the process.

2. Scheduling Stage: - In this stage, the professionals would need to

(a) Clearly define the restrictions in the business

(b) Select the team for allowing a smooth changeover

(c) Read the transactions in detail to know the implications

3. Implementation Stage: - This is the crucial stage of actual execution of the process and would involve

(a) Preparation of checklists by the professionals

(b) Interviews and discussions with the concerned characters controlling the specific processes3

(c) Documentation of the transactions under IFRS

(d) Reporting the financial under IFRS

Although it sounds very easy, the transition will not be very easy process and companies need to be alert and cautious while going in for such a step.

US CPA in India provides detailed information on CPA, US CPA Exam, CPA Review, and more. Visit http://www.takshilalearning.com/ for more info. and about Diploma in IFRS.