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IFRS Advisory Services

When is it time to switch horses?


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If it hasn’t already arrived, the day is coming soon when your company will convert its financial reporting to International Financial Reporting Standards (IFRS). But when? Some companies have good reasons to hold on to Generally Accepted Accounting Principles (GAAP) as long as possible. But others are making a powerful choice to use the switch to IFRS as a catalyst to drive finance transformation—and to pull ahead of the competition.

As a recognized leader in financial transformation, Deloitte has supported some of the world’s largest and most complex IFRS implementations. Our network of finance professionals, consisting of more than 400 practitioners in the U.S. and 700 worldwide, help organizations transition to IFRS through their hands-on experience and cross-functional knowledge that spans accounting, tax, systems and valuation. Learn more about the offering.

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Seeing possibilities beyond compliance
What drives companies to an early IFRS conversion? The new standard is already the norm in more than 100 countries where U.S. companies are doing business—or intend to. Others are migrating to new financial systems, and may prefer the efficiency of making two changes at once rather than one after the other.

And then there’s a third group. Some business leaders use IFRS adoption to drive strategic improvements in their overall business or operating models, a change that may extend far beyond technology. They project that the cost savings derived from consolidating policies, processes and systems under IFRS may help offset the transition costs, and consistent, accurate financial reporting can enhance agility and decision-making across the enterprise. Opportunities for shared services become more feasible. Integration of cross-border acquisitions and mergers might become simpler, and divestitures may attract more interest from international buyers. The financial and strategic benefits can be substantial, but so is the effort to execute an initiative as pervasive and complex as IFRS adoption.

How we can help

As a recognized leader in financial transformation, Deloitte has supported some of the world’s largest and most complex IFRS implementations. Our network of finance professionals consisting of more than 400 practitioners in the U.S. and 700 worldwide, help organizations transition to IFRS through their hands-on experience and cross-functional knowledge that spans accounting, tax, systems and valuation. Our services include:

Project Management Office (PMO) formation. Few companies have the depth and breadth of knowledge needed to analyze, interpret and coordinate all the changes that IFRS adoption requires. Deloitte accounting and consulting professionals work on-site with leadership and employees to form an integrated change- and program-management team that gets the job done using tested approaches that are global, comprehensive and effective.

Accounting process redesign. The consulting team redesigns processes and systems to enable and align to accounting changes brought on by IFRS, and follows through with written policies, procedures and employee training.

Shared services design and implementation. Adopting IFRS across an enterprise can open the door for more efficient general accounting and transaction processing in centralized locations. Some companies project that the cost savings from implementing a well- designed shared services model for processing general accounting and financial transactions may offset much, or perhaps all, of the conversion costs.

Financial systems design and implementation. Does the organization have the financial backbone—the right technology and systems architecture—to support an efficient change to IFRS? Today’s enterprise resource planning (ERP) software is designed to support IFRS, simplifying the conversion process and enabling a highly integrated systems environment after conversion. We help companies analyze their current systems and future needs to make the right choice—then we follow through with design, implementation and ongoing support of the new financial systems.

Consolidation and budgeting tools implementation. We recommend and implement the right tools to efficiently align consolidating GAAP and IFRS systems.

Compensation, benefits and actuarial services. Our compensation, benefits and actuarial consulting professionals assist in evaluating and accounting for the impact of IFRS on retirement and other benefit plans.

Bottom-line benefits

No two organizations have the same IFRS experience, but the potential rewards for diving in and handling the transition well can spread far:

  • Highly integrated and well-controlled financial accounting and systems environment
  • Reduced regulatory compliance risk
  • Lower finance and IT administrative expense
  • Consistent financial reporting for global analysts
  • Streamlined financial reporting processes
  • Opportunity to modernize the technology platform and increase functionality
  • Elimination of redundant software applications, infrastructure and support

Five ways to get more value now

Unless you’re facing a regulatory mandate to convert to IFRS, it’s easy to push it to the side. But IFRS may be coming to the U.S. sooner than you think. The latest SEC’s guidance could have large companies converting to IFRS as soon as December 31, 2015, with transition reporting requirements beginning as soon as January 1, 2013. Here are some strategies for handling the change:

See where you stand. Take a close look at the cost of sticking with GAAP reporting—it may be higher than you think. IFRS already affects statutory reporting across many companies’ foreign operations. Identifying where IFRS currently is required or permitted and developing strategies to leverage these statutory locations could mitigate differences in reporting and save your company time and money over the long run.

Plan the timeline. Evaluate the differences between IFRS and US GAAP and how they will impact your organization. Begin planning now for issues that will require a long lead-time, including process and system changes that will be required.

Clean house.
If your organization has experienced serial acquisitions or rapid market expansion, chances are your finance organization invests many hours each year mapping a jumble of accounts for corporate reporting. Time spent creating a global chart of accounts now will give you a head start on preparing for IFRS conversion.

Fix what’s broken. Think of all the manual entries and workarounds a finance organization invents to make an outdated consolidated reporting system work. Finance leaders have found IFRS mandates provide the tipping point they need to rationalize systems upgrades that improve efficiency, decision-making and flexibility.

Look down the road. Consider how your financial services delivery model could be improved to provide stronger support for the overall business model. Would folding IFRS conversion into a shared service environment help you build the business case to move ahead now, rather than later?

IFRS Advisory Services in action

  • A global leader in information services, which reported in Canadian GAAP, merged with a European company, which used IFRS. The merged entity wanted to move to a uniform accounting standard, as quickly as possible to gain the benefits of the single standard. Deloitte provided the support and guidance needed to meet the aggressive regulatory filing deadline by converting the parent company’s historical financial reports to IFRS. Deloitte also helped develop and execute the roadmap for the combined company’s IFRS adoption and communication plan. As a result, the combined company met the filing deadline and achieved it’s objective of having global comparative financial statements in less than one year.
  • A global leader in consumer and industrial products, headquartered in Asia with operations in the U.S., had a fragmented GAAP-based financial reporting structure and autonomous subsidiaries. The CFO wanted to create more efficient, centralized accounting systems and processes that would position the company for future growth. The anticipated IFRS mandate helped the CFO build the business case for finance transformation. Deloitte was chosen to design the global approach and co-lead the global PMO to support the company in developing and executing the roadmap for IFRS adoption and the broader systems, operations and process transformation.

As used in this document, “Deloitte” means Deloitte & Touche LLP, which provides audit, assurance and risk management related services, Deloitte Consulting LLP, which provides strategy, operations, technology, systems, outsourcing and human capital consulting services, Deloitte Tax LLP, which provides tax services, and Deloitte Financial Advisory Services (FAS), which provides financial advisory services. These entities are separate subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

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