International Financial Reporting Standards (IFRS)

International Financial Reporting Standards (IFRS) is a globally accepted set of accounting standards and interpretations established by the International Accounting Standards Board (IASB). IFRS has already been adopted by many countries in Asia and Europe, and is rapidly gaining acceptance in the remaining key markets. Countries such as Canada, Brazil, India, Korea and Japan will be adopting IFRS by 2011 or shortly thereafter, while the SEC is proposing a roadmap requiring IFRS adoption between 2014 and 2016 – with selected early adopters by 2010. It remains to be seen whether the current economic turmoil globally will slow down adoption.

What are the key business drivers for conversion to IFRS? A set of consistent accounting standards and disclosure requirements; a uniform measurement system; additional capacity to grow and expand through greater access to capital markets; and market recognition for providing more transparent information, potential for lower cost of capital and improved credit ratings.

Adoption of IFRS will be one of the most significant changes that publicly traded companies will have to deal with over the next few years. Conversion to IFRS is much more than an accounting compliance issue and can impact many areas throughout an organization. IFRS may have significant overlap and cross-dependencies with ERP implementation, financial reporting and consolidation, and performance management projects, and will have an impact from annual 404 Compliance signoff related to internal controls changes for SEC registrants. From a pure business perspective, addressing fair value requirements, inventory valuation, revenue recognition, asset component accounting, share based payments and asset impairment typically require additional data, processes and systems to address.

IFRS represents the key opportunity for strategic CFOs to make their finance organizations more effective with the transformation to an integrated finance organization (IFO) supporting the need for innovative change driven from the CEO and agile competitors.

IBM has significant capabilities, experience and alliances to help support the IFRS conversion. Your enterprise will benefit through a proven approach for full life cycle of the conversion process; strong business and technology skills (business process change, ERP implementations, systems integration); program management and governance experience; flexible resourcing models including offshore support; ability to support large programs across different geographies; and experience from the IBM IFRS conversion.

Business challenges

As IFRS has significant impact beyond accounting and financial reporting functions, adoption presents a key challenge for the CFO. It will require changes across people, process, data and technology that will need to be factored into the conversion plan. In many ways, IFRS will be the most significant enterprise-wide change initiative in the near future. Many organizations are evaluating how a transition to IFRS will affect them and need to assess readiness.

• How will the conversion of IFRS be managed throughout the organization?
• What expertise will be required to ensure successful implementation?
• Will you be able to adopt standards and best practices to ensure efficiencies?
• What impact will IFRS have on regulatory capital requirements and risk appetite?
• Can our IT systems handle revised requirements under IFRS?
• How will IFRS impact our stakeholders and who will require training?
• What is the timeline for our conversion project?
• How will management handle the impact of transitioning from GAAP to IFRS?
• How can our organization take advantage of the opportunities presented by the conversion to IFRS?
• Has IFRS been incorporated into strategic and planning models?

IFRS services that we offer

• IFRS gaps and impact assessment
• Target architecture development
• Conversion planning
• IFRS conversion services through design, build, implementation cycle

• Program management (process, governance, organization)
  • Total continuity program management
    


• Change management and user readiness
  • Organization change strategy

Why IBM

IBM has practical hands-on experience with IFRS conversions and similar compliance programs across Europe and North America. Our phased methodology can support our clients from diagnostic and design phases through to implementation and optimization phases. We are independent from the audit firms and can help throughout the project lifecycle without being restricted by auditor independence rules. IBM is the preferred implementation partner for large ERP vendors’ IFRS solutions (SAP and Oracle). We are able to provide tools and accelerators to help manage large-scale implementations. We can handle a complex IFRS conversion as part of an overall finance transformation program, or as a more straightforward individual program tailored around the very specific IFRS requirements. IBM also offers flexible delivery models and can demonstrate how to use offshore resources in order to achieve higher cost efficiency and value.

With more than 4,100 financial management resources located across the globe, IBM has a strong record of serving as a trusted advisor to CFOs and finance leaders. Our dedicated teams of research and thought leadership professionals provide insights into the issues facing finance professionals enabling us to offer deep finance function expertise coupled with effective technology implementation and integration capability.

We offer proven finance transformation tools and experience, such as SAP, Oracle and Cognos. IBM financial management consulting services brings strong partnerships; we are the number one SAP Consulting Provider and SAP's first Global Alliance Partner. We bring experienced IBM finance executives to meet with clients, including former CFOs, controllers and CIOs. Our consultants have worked with 75% of the global Fortune 50 and 80% of the FT 50. We frequently leverage our IBM CFO and IFRS internal implementation teams to share their Finance Transformation stories and lessons learned.