What function or team within your organization is ideally positioned to take a lead oversight role in your company’s transition to International Financial Reporting Standards (IFRS)?

How about internal audit?

Now that internal auditors have (hopefully) handed off ongoing Sarbanes-Oxley compliance to business process owners and made some headway on enterprise risk management (ERM) programs, could they be assigned to be the “eyes and ears of the audit committee” and a “business advisor” on IFRS implementation?

Ernst & Young thinks so. In a new paper, “Inside IFRS: The Opportunity for Internal Audit,” the firm argues that IA’s enterprise-wide purview of the organization and its business processes make it “uniquely qualified to assist business units with their assessment of [IFRS] conversion’s likely impact and to help develop plans for implementing the necessary changes.”

That sounds about right, but how many internal audit functions are sufficiently staffed, and have enough time, to add IFRS to their list?

The Ernst paper acknowledges that most IA departments have a lot on their plate, and then offers the following criteria to help companies assess the degree to which IA is prepared to take on an IFRS oversight role:

• Does the IA function have adequate resources to fulfill all of the missions necessary to an IFRS conversion?

• What projects already scheduled in the internal audit plan might need to be scaled back or curtailed in order to properly assist/test IFRS-related processes and controls?

• What risks are inherent in an IFRS conversion, and what risks might any IFRS-driven changes to the existing audit plan introduce/pose for the organization?

• What specific additional resources might be needed by the IA function and how best can they be obtained?

• What training or refocusing of existing resources might be prudent given the demands of an IFRS conversion, both pre- and post-conversion? ###