Transcript Mind the GAAP gap

Mind the GAAP
A run up to 2010 – 2012
GAAP Gap
Implications
Strategies
Dr Nordin Mohd Zain – Executive Director
Contents
• Background
3
• A run up to 2012
5
• Timing gap
• Standards gap
• Mismatch
2
8
• Implications
11
• Strategies accountants can offer
19
• Conclusion
20
Background
• August 2008
• Prior to August 2008
• State of readiness
• Field test of large market cap companies
• 1 January 2010
• Basel 2
• 1 January 2012
• Global trends
• Engaging the regulators
3
IFRS World
Canada
2009/2011
Europe
2005
United States
(2014)
China
2007
India
2011
Malaysia,
Spore,
Indonesia
(2012)
Brazil
2010
Chile
2009
South Africa
2005
Current or committed to using IFRS
Japan
(2010/
2015?)
Australia
2005
A run up to 2012
• To 1 January 2010 today: 4 months 20 days
• To 1 January 2012 today: 2 years, 4 months, 20 days
5
Footer
Timing Gap
SHRINKING
• Quarterly
• Half yearly
• Annually
Today
-6
-5
2010
-4
-3
-2
-1
0
2012
1
2
3
FRS 139
FRS 7
FRS 4
Interpretations
4
5
6
7
8
9
10
11
12
13
14
15
n
n
24
Full suite IFRS
Full suite IAS
Amendments
6
Standards Gap
• Widening still (until 2012)
7
Mismatch
Global competitiveness
State of readiness
8
GAAP @ 1 January 2010
MASB
IASB
6
8
IFRS
1
2
3
4
5
6
7
8
27
29
IAS
1
2
7
8
10
11
12
16
17
18
19
20
21
23
26
27
28
29
31
32
33
34
36
37
38
39
40
41
1
2
4
5
6
7
8
9
10
11
12
13
14
15
33
(4)
37
6
(11)
17
IFRIC
24
16
17
18
State of readiness . . .
•
• Hi
At Home
•
•
US Survey (March 2009)
•
•
• Lo
Limited study
•
•
Budget not yet allocated (65%)
Budgeted for assessment and
readiness (25%)
Impact analysis
Stress tests
10
Implications
Mark your calendar two years ahead
11
Timing traps
First Qtr
result on
FRS 139
compliant
Today
2010
Qtr 1
FRS 139
FRS 7
FRS 4
Interpretations
Opening IFRS
compliant
Balance Sheet
Half 2
FRS 3 rev
FRS 101 rev
Amendments
2011
2012
Full suite IFRS
Full suite IAS
Amendments
12
Standards traps
(PHASE 1)
FRS 4
Insurance
(PHASE 2)
FRS 141
Agriculture
FRS 7 Fin.
Instrument
Disclosure
Financial
Statement
Presentation
•
•
•
•
systems infrastructure
processes
data capture
skill set
FRS 3
Business
Combination
FRS 139
Financial
Instruments
IFRIC 4
Leases
Income
taxes
13
Fair value concentration
FRS 7 Financial.
Instrument
Disclosure
FRS 139
Financial
Instruments:
R&M
IFRIC:
Reassessment of
Embedded Derv
IFRIC : Hedges of
Net Foreign
Operation
etc, etc
FRS 132
Financial
Instruments:
Pres
Amendment:
Embedded
Derivatives
Fair Value
14
Forces at work
Investors, stakeholders
Regulators
State of readiness
Resources
15
FRS 139 implementation for
companies
How do we migrate?
16
Illustrative company timeline
Full FRS
transition date
Full FRS
reporting date
FRS 139
reporting date
FRS 139
transition date
2012
2011
IFRS competence
2010
 FRS 139
Opening
Balance
 Roadmap
 Transition to
 System and
FRS 139
Process
 Investor
Redesign
Communication
 On-going training
 Reporting
and workshops
 Trial run
2009
2008
 Awareness
 Assessment on
accounting
gaps and IT
requirement
 Planning
 Initial training
 Review system
& process
design for full
FRS
 Follow-up
training
 Trial run
Training for staff
Alignment & standardization of statutory reporting
 Full FRS
Opening
Balance
 Full Transition
to FRS
 Investor
communications
 Reporting
Pitfalls
• Piecemeal execution
• Left to CFO or Finance manager to handle
• Unsustainable follow through – unsure of whose responsibility
• No PMO
• Coordination issues
• Legal, IT, HR unaware
• Caught off guard with impact on bottom line
• Stress test ignored
• Painful experience of being reprimanded
• Legal requirement consequential to investor
• Board still oblivious of (the legal) FRS requirements?
• Financial Reporting Act 1997
• Bursa Listing Requirements
18
Strategies accountants can offer
• Change must come from the top
• Board must be the Champion
• Communicate organizationally
• Get help if you have tried to get to the top
• Assess state of readiness
• Internal gap analysis
• Impact analysis, stress test
• Invest, especially in staff skill
• Worth every sen in longer term.
• Communicate externally
• Must engage early to avoid surprises
19
Conclusion
• Mismatch of time and GAAP compels urgent attention
• Plan for 2010 differently from 2012
• Recognize external ‘givens’
• Stress test internal strengths and weaknesses
• Successful execution requires end-to-end strategy
• Engage professionals experienced to handle the job
20
e-mail: [email protected]
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