Mobilising around IFRS Planning and Transition Activities Caribbean Association of Audit Committee Members

Caribbean Consulting Group Basseterre Robertine A. Chaderton 2010 St. Kitts

What is IFRS?

“ International Financial Reporting Standards

(IFRS) are a high quality, understandable and enforceable global accounting standards that require high quality, transparent and comparable information in financial statements” (International Accounting Standards Committee) May 2000 Robertine A. Chaderton 2010

What are the benefits of IFRS?

• • Helps participants in capital markets and other users to make economic decisions – capital efficiency No need to restate results from one country to another country‘s statutory report – operational simplicity Robertine A. Chaderton 2010

Virtually all accounting and external reporting principles are addressed in IFRS See HANDOUT Accepted in more than 100 countries Robertine A. Chaderton 2010

Transition challenges

• • • • • • Recruiting skilled staff Determining “correct” interpretation of standards Resolving disagreements with auditors Ensuring accountability of department that are affected Communicating IFRS impact to external stakeholders Training and educating accounting staff Robertine A. Chaderton 2010

IFRS affects all functions that

produce, consume

or

transmit

financial information Robertine A. Chaderton 2010

NOT ONLY ACCOUNTING

• •

DATA PRODUCTION & TRANSMISSION

• •

IT Systems

New data requirements Recalculated formulae •

Internal Controls

Modified Controls

Policy

New decision rules & policies Changed accounting premises

DATA CONSUMPTION

• •

Accounting Dept

Changes to Balance Sheets Debt Covenants •

Sales Team

Revenue Recognition • •

Investors

New Financial Statements Different KPI Formulae • •

Human Resources

Modified Pension Plans Share Based Compensation Robertine A. Chaderton 2010

Managing the change to IFRS (1)

• • • • • Implementing IFRS should be treated as a project and the change managed Accurate assessment of the task involved Proper planning- detailed task analysis could be drawn up to control work performance Human Resource management – project properly structured and staffed Training –where skills gaps, remedial training provided Robertine A. Chaderton 2010

Managing the change to IFRS (2)

• • • • Monitoring and accountability – progress reports, regular meetings, participants personally account for tasks and flag problems early Achieving milestones - celebrate success on completion of key steps so as to sustain motivation & performance Physical resourcing – IT equipment & office space Process review –change is NOT a one off quick fix Robertine A. Chaderton 2010

Managing the change to IFRS (3)

• Follow up procedures- follow up to make sure changes stick

The entity must make an unreserved statement to its compliance with IFRS

Robertine A. Chaderton 2010

Transition Teams

• • • Project Manager Reporting and Standards Team Business Liaison and Training Team Robertine A. Chaderton 2010

Organising the Unknown

• • • FINANCE/ACCOUNTING DEPT Identify the relevant IFRS standards for each component or policy area Provide an impact assessment for each policy Provide the timing of the planned implementation • • IT/FINANCE Identify how change will affect ERP systems Identify how change will impact consolidation system Robertine A. Chaderton 2010