Companies around the world are facing one of the biggest-ever change in financial reporting. In Europe, from 2005 there is the requirement to publish consolidated financial statements prepared in accordance with international standards, instead of the old national accounting rules.
2. The main issues facing companies in making the transition to IFRS
The preparation of IFRS-based financial statements needs careful planning and good change management. Apart from the technical issues there is the need of Training & Recruitment, raise internal awareness, review contracts dependant on old accounting rules and finally prepare a good communication with the market.
2.1. Managing Change
The first challenge in organisations is to ensure the staff has the knowledge to guarantee a smooth switch to international financial reporting standards and after the implementation they can do their jobs under the new system - both at head-office level and at local operating units.
The use of flexible resources with knowledge in IFRS and the investment in training are two solutions adopted by most of the companies. The Big Four firms are playing a very important role, helping companies in this transition period by elaborating plans, building processes and training staff.
The training demand is wider than purely from finance functions, as several of roles are affected by the new IFRS: the board members, credit and equity analysts, M&A teams, traders who buy and sell derivatives, tax and regulatory teams are just a few examples.
b. Data and Software
Meeting IFRS requirements means providing new data or present it in a different way for both 2005 and the comparative period, so identifying the new requirements also needs attention as the collection of this data may prove difficult. There is the believe that the most appropriate strategy for providing information of auditable quality...