IFRS Readiness

Transitioning from GAAP to IFRS

International Financial Reporting Standards (IFRS) is an accounting driven initiative that will significantly impact Enterprise Resource Planning (ERP) systems. Core accounting and finance functions, consolidation and reporting will all be affected by IFRS and with the deadline approaching in both the US and Canada, there is real urgency to get preparations underway.

IFRS Readiness Toolkit

UNIT4 Business Software has prepared a toolkit for companies to assess the IFRS readiness of their ERP systems and help plan their transition:

• The IFRS HealthCheck poses diagnostic questions to provide a snapshot of your ERP system's ability to adapt to IRFS.
• The IFRS Buyer's Guide provides questions to ask ERP vendors to gauge their product's suitablity for transitioning to IFRS.
• The whitepaper "The Challenges Facing Organizations Migrating from US GAAP to IFRS" makes a strong case for how Agresso's post-implementation agility enables a smooth transition to IFRS.

Experience

We have already navigated the transition to IFRS in Europe and can educate the North American market about the change from a technology perspective. Having the correct tools is critical for making the transition to IFRS smooth, and at the lowest possible cost.

The Timing

Publicly-traded Canadian companies must be compliant with IFRS beginning January 1, 2011. Publicly-traded US companies are targeting 2015. Generally, the sooner a company begins to prepare, the better:

IFRS Impact on IT Systems

IFRS conversion will have a broad impact on what information your ERP system tracks and what it does with that information.

• Additional data and informational elements will be required. This will require a detailed and comprehensive understanding of the required accounting changes before any system modification can commence.
• Information be processed, applied and reported differently. This will require a thorough understanding of your existing IT business systems, especially the data flow from data sources (disparate systems, spreadsheets etc.) to the general ledger (core back-office accounting/financial application) to the “last mile” reporting and consolidation processes.

Consider the following:

IFRS Impact on IT systems What additional information will be required? How will this information be applied and calculated? How will this information be reported?	Data Availability		Ledgers, transactional sytems, valuation systems and data collection points will be required to capture new data.
	Process redesign		Information will be calculated on a different basis; processes will require re-mapping and chart of accounts will require reconfiguration.
	Reporting		The need for additional disclosure information will drive changes to existing reports.
	Systems scalability and architecture		New data requirements usually require new interfaces. Database infrastructure and systems capacity will need revisting to accommodate additional data, transaction processing and calculation requirements.
	Procedures and controls		The existing framework for procedures and controls will require changes to ensure alignment with the new requirements.
	Risk management and governance		What will the changes mean for the existing risk framework?