IFRS update summer 2006 – the way forward

ifrs special

In association with PwC

You’ve done the hard work, you’ve made the figures public and the whole IFRS
process is starting to bed down. Now the new standards have to be managed and
built into day-to-day operations. It won’t be easy, but it has to be done. So,
here are 10 tips to help you live
with IFRS.

Link: Access IFRS –
PwC’s IFRS resource centre

1 Don’t be blind-sided
They shouldn’t really catch you out because the IASB issues plenty of
warning, but it’s best to keep on top of these things. IFRS7 is a prime example,
because it will introduce some new disclosures about financial risks that
companies will need to prepare for.

2 Keep all your receipts
Or to put it another way, make sure you’re collecting data in an
ordered way and making IFRS part of the ongoing reporting process. Like never
before, IFRS has made accurate and reliable data collection an absolute
imperative. So check the systems, make sure they do what the IT bods said they
would do and make sure you have a way to back it all up.

3 Teaching old dogs new tricks
Keep up the training. Chances are you splurged on lots of consultancy in the run
up to, and immediate aftermath of, implementation. Now your internal chaps have
got to take over the reins and will need to keep abreast of all developments and
that means training. You will also need to think of those staff members outside
the immediate implementation team. Training the broader finance team will be one
of the key ways of embedding IFRS more deeply.

4 Lurking in the shadows
Those of you with US listings (sorry to remind you) will also be grappling with
implementation of Sarbanes-Oxley. That means hiding away in the corner is the
issue of making sure controls governing your IFRS reporting must meet the tough
requirements of the Act. Regulators in the US are picky and the Sarbox
requirements extensive. It might require a mini project in itself to make sure
IFRS is sitting comfortably with Sarbox.

5 It’s all about the money
Embed IFRS into the business, aligning your management information with IFRS.
The sooner you do this, the sooner you can start making sense to the
stakeholders and the sooner the new standards can be used for effective

6 Keep checking
It’s obvious, but worth pointing out ­ programme a quarterly IFRS review. This
should let you keep an eye on new issues as they happen, whether your
interpretations are correct and whether the knowledge base in your staff is

7 It’s all in the translation
The standards sometimes aren’t that easy to follow, so the International
Financial Reporting Interpretations Committee was created to provide some
guidance, by way of interpretations. These are useful and emerge fairly
frequently and a close eye should be kept on them. However, not every piece of
copy from the IASB will come with an interpretation, so don’t sit back
complacently waiting. Be proactive and find out what it’s all about.

8 Open your mind
Fair value reporting, as embodied by the whole IFRS ethos, can and will
produce volatile numbers. This might be the time for thinking about additional
profit information for presenting to the outside world.

9 Love thy neighbour
Watch for what the other companies are doing in your sector; they might just
have it right if you’re unsure what to do yourself. Having said that, don’t just
follow on blindly. If you see something that appears to make the right call ­
have it verified. It could be way off the mark.

10 Shop ‘til you drop
Business has to go on, with or without IFRS, and if you’re at all ambitious that
means acquisitions. But you cannot contemplate adding to your company without
considering the IFRS implications. Don’t forget, there’s now no such thing as a
merger in accounting terms, and goodwill amortisation charges have gone in
favour of annual impairment testing.

Link: For the latest news and analysis on IFRS, updated
every week, register for Access IFRS –
PwC’s IFRS resource

Related reading

Fiona Westwood of Smith and Williamson.