Ten tips to ease the transition to IFRS

A common challenge for multinational corporations is achieving consistency across operations in different countries with different practices and standards. Due to their size and growth through acquisitions, multinationals often end up using more than one accounting system – but running multiple accounting platforms is both inefficient and very costly.

During the early 2000s, the International Accounting Standards Board (IASB) sought to bring consistency to international accounting and began development of IFRS. While the IASB and FASB have worked together to achieve a convergence of IFRS and US GAAP, key differences remain. If your company is thinking about moving to IFRS, there are 10 critical actions that should be put in motion to ensure the desired results: 

1. Obtain buy-in at all levels of the organization – including the board of directors – for the idea that IFRS is a strategic imperative. 

2. Create a formal steering committee with broad representation from key stakeholders and clearly identified roles and responsibilities.

3. Assign a senior internal individual to lead the effort; ideally, an experienced manager with influence throughout the organization.

4. This is a change-management initiative, so be clear about the level of change. For example, in addition to converting to IFRS, do you intend to improve processes as part of the change?

5. Leverage your existing in-house project management methodology – or, if you don’t have one, create one using an external project manager. Understand that initiatives like this take more time and resources than you think initially. Planning, monitoring and measuring progress are all critical.

6. Be honest in assessing in-house resource allocation and competency, and plan accordingly. Most companies cannot complete this transition without using outside experts who have the knowledge, skills, expertise and perspective to guide the process.

7. Identify the respective roles of headquarters and field offices, including foreign subsidiaries. A centralized focus has proven valuable to most IFRS implementations, but active and ongoing participation in the field is paramount.

8. Plan how to involve IT with changes needed to support IFRS implementation. Will IT be involved on a centralized basis? How will regional IT be used?

9. Determine the best way to involve the external auditor team and the role it needs to play during the IFRS transition.

10. A significant amount of documentation will be generated as part of IFRS implementation and you will need to establish standards for document creation, sharing and storage during the transition.

Switching accounting platforms is a big undertaking and requires input from across the corporation to be done successfully, but it can help your business be better positioned for future growth and investment.