Part II: IFRS or Standards Convergence?

Jack Sweeney April 21st, 2009

When it comes to the adoption of global standards, there’s nothing new about the notion of “convergence,” according to D.J. Gannon, partner, Deloitte & Touche LLP, and leader of Deloitte’s IFRS Center of Excellence. The key question for the SEC and policy makers, says Gannon, is whether we adopt IFRS or continue down the “convergence path.” Gannon points out that the path to convergence has at times led U.S. GAAP and IFRS to part ways as they relate to certain standards – a worrisome development, he asserts. ###

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4 Comments to “Part II: IFRS or Standards Convergence?”

1. Arnold Tholstadt Says:
   

   April 22nd, 2009 at 9:42 am

   According to another blog on BFFB, Arnold Hanish, the vice president of finance at Eli Lilly the biggest concern for finance professionals is the current uncertainty surrounding a hard adoption date: “remove that uncertainty, he urges, because it will take large, global companies at least two years to prepare for conversion.”
   We strongly agree!

2. tara young Says:
   

   April 22nd, 2009 at 9:50 am

   As a large multi national, we are now estimating our current conversion appraoch to take no less than 30 months - with the modification of our systems presenting the greatest challenge.

3. DJ Gannon Says:
   

   April 30th, 2009 at 3:30 pm

   Arnold – You’re not alone. One of the key issues of commentary on the SEC’s roadmap is the need for certainty around the timing of adoption. In a recent Deloitte & Touche LLP survey of finance professionals, 62% of respondents believe that the SEC should soon establish a “date certain” for mandatory IFRS adoption in the United States. There also have been a number of comments on the timeline for mandatory adoption of IFRS, and specifically the need for allowing companies sufficient time between when the SEC decides to require IFRS and the date of transition (i.e., opening balance sheet date). A calendar year end company that would be required to adopt in their 2014 financial statements, for example, would need to begin accounting under IFRS as of January 1, 2012 – their date of transition. My experience has been that most companies need between 18 and 24 months before the date of transition in order to provide for an efficient and effective transition.

4. DJ Gannon Says:
   

   May 1st, 2009 at 12:00 pm

   Tara – For many large multi-national companies it can take 24 – 36 months to fully convert to IFRS, with systems often being a time consuming component. Common areas that often require system changes are R&D, fixed assets, inventory, dual reporting (general ledger, sub ledgers and consolidations), and internal management systems for planning, forecasting and budgeting.
   To make the eventual transition to IFRS less burdensome, we suggest that our clients consider IFRS requirements when modifying, upgrading or implementing new systems or financial modules. Companies may also consider using some pre-developed IFRS solutions to attempt to streamline the changes required to financial systems.

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