IFRS: are you ready? 

By Lorie Murdoch
Illustration: John Sapsford

Have you started preparing for the upcoming International Financial Reporting Standards? According to a survey conducted by Resources Global Professionals at the September CICA Financial Reporting and Accounting Conference, a majority of companies have not. More than 75% of respondents indicated their firms will implement IFRS but 54% haven’t done any preparation; 11% have done some “initial thinking,” and 3% have a completed plan.

The results were tallied from 10 questions responded to by more than 200 CAs from 13 industries in various organizational roles: 21% controllers, 9% v-p finance, and the remaining (70%) had differing roles in finance and “elsewhere.” More than 50% came from five industries: banking (19%), utilities (11%), manufacturing (11%), oil and gas (8%) and government (8%). Of the companies represented, 58% were public and 33% were SEC registered.

Although 51% said the new reporting standards will have a “very significant impact” on shareholders’ understanding of financial statements, this concern was topped by five others when respondents were asked to list the biggest challenges in order of difficulty: capacity of staff, e.g. workload (22%); capability of staff, e.g. upgrading skills (20%); reporting (19%) financial processes (14%); financial systems (13%); shareholder understanding (11%). Forty percent think the challenge of IFRS will require about the same level of effort as SOX; 16% believe it will take “significantly more” effort to implement; and the majority (60%) expect it to take the same (26%) or more (34%) effort than Y2K.

Although the CICA does not expect IFRS to be fully implemented by public companies until 2011, there will be a transition period during which the Accounting Standards Board will adopt converged standards, some of which have already taken place this year — accounting changes, financial instruments and disclosures — and will continue in 2007 with business combinations, income taxes, earnings per share; and in 2008 with consolidations and fair value measurement.