Market Digest

With the Securities and Exchange Commission’s recently approved proposed IFRS Roadmap and rule that would permit certain U.S. companies to prepare and issue financial statements using International Financial Reporting Standards (IFRS), Deloitte has launched a series of whitepapers that offer considerations and guidance on IFRS conversion for specific industry sectors.

The first three papers in the series address IFRS considerations in the insurance, oil and gas, and real estate industries, and are available immediately on Deloitte’s IFRS web site via the following urls:

http://www.deloitte.com/us/ifrs/insurance
http://www.deloitte.com/us/ifrs/oilandgas
http://www.deloitte.com/us/ifrs/realestate
The movement toward IFRS, which is more reliant on general principles than detailed rules has been building for years and will impact every industry sector. Today, more than 100 countries have adopted IFRS as a basis of public reporting – now the SEC is poised to bring the U.S. on board.

D.J. Gannon, partner and leader of Deloitte’s IFRS Solutions Center, said, “IFRS represents a new chapter in U.S. public reporting requirements, and with that a fundamental shift in how we view accounting and financial reporting. Financial executives of companies across all industry sectors will need to fully understand the impact IFRS will have on their organization, including the potential costs and benefits.”

Gannon added, “The impact IFRS will have on companies in each industry sector will vary depending on the issues unique to the sector. Some companies have significant regulatory and capital market considerations, while others may have complex organizational structures that include multiple subsidiaries and joint venture relationships. This series is intended to help financial executives understand the key issues affecting their industry so they can make informed decisions on when and how to embark on conversion to IFRS in a more measured way.”

Each Deloitte IFRS industry sector paper provides an overview of the key impacts of IFRS implementation: technical accounting, process and statutory reporting, technology infrastructure, and organizational issues. Each paper examines specific potential differences in technical accounting and the broader implications of such differences when converting to IFRS from U.S. GAAP. Key to a successful transition to IFRS, across all industry sectors, may be in how well companies handle and address the broader, nonfinancial aspects related to IFRS adoption.

“No question about it. A successful IFRS conversion project will involve not only understanding the technical accounting and financial reporting issues, but also issues around internal processes and controls, regulatory, statutory, and management reporting, technology infrastructure, and organizational issues such as tax, treasury and cash management, legal and human resources,” said Gannon.

And, with IFRS transition timelines estimated at three to five years, if companies take only one action right away, we suggest that it be to develop an IFRS implementation roadmap,” adds Gannon.

In September, Deloitte will issue several new IFRS whitepapers, each focusing on a specific industry sector.

Source: Deloitte