IFRS - training
The world over, there’s much talk on IFRS and convergence of local GAAP to IFRS. The SEC in 2007 abolished the requirement for the foreign companies from providing a reconciliation statement between their financial prepared under IFRS to financial in US GAAP. Thus the SEC made a major statement in 2007 itself that foreign companies placed in the usa need not convert their IFRS prepared financial to financial confirming to US GAAP.
The transition to IFRS would first must be broken into 3 steps:
1. Initial SStage: The pros would have to understand the business because the starting point towards transitioning to IFRS and then define the scope of the act as well as define period of time for that process.
2. Planning Stage: On this stage, the pros wowould have to define the constraints in the commercial, select the team for enabling an easy transition and study the transactions at length to know the implications
3. Execution Stage: This is actually the crucial stage of actual execution from the process and would involve preparation of checklists by the professionals, interviews and discussions with all the concerned individuals controlling the
specific processes, documentation with the transactions under IFRS and reporting the financial under IFRS
Although it sounds quite simple, the transition will never be super easy process and corporations have to be alert and cautious while going in for such a step.
IFRS 1 states that:
(a) An entity’s first financial statement under IFRS will be the statements prepared under IFRS.
(b) An entity shall prepare a dent IFRS balance sheet at the date of transition to IFRS. This would be a kick off point for the entity’s accounting under IFRS.
(c) Such opening IFRS balance sheet don’t have to be presented in its first IFRS financial statements.
(d) While preparing the outlet IFRS balance sheet, an entity shall:
1. Recognize all debts and assets whose recognition is necessary under IFRS.
2. Not recognize such assets and liabilities as are not permitted by IFRS.
3. Reclassify those items that have been recognized under local GAAP together type of asset/liability/equity, but are a different type of asset/liability/equity under IFRS.
4. Apply IFRSs in measuring all recognized debts and assets.
It would be pertinent to note that IFRS grants limited exemptions from your above requirements in specified areas in the event the price of compliance would almost certainly exceed the benefits there from.
Also, the IFRS prohibits the retrospective use of IFRSs in some areas, specifically if the retrospective application would require judgment through the management on past condition whose outcome is already known.
IFRS also requires the entity mention how a transition from previous GAAP to IFRS affected the entity’s reported financial position, financial performance and money flows.
With a lot requirements and thus much on the line, it would just be wise to seek IFRS training before transitioning to IFRS.
India would be converging to IFRS by 2011 and that means Indian CPAs who’d have no less than 3 years of experience in reporting under IFRS; businesses in US employ a nice choice to go for after they transition to IFRS.
