IFRS & US-GAAP Implementation
Curse or Blessing?
Since January 1, 2005 according to EU directive, publicly listed companies must prepare and report consolidated annual financial statements according to the provisions of the “International Financial Reporting Standards” (IFRS).
The EU directive affects not only group headquarters (parent companies) rather also the associated subsidiaries.
The introduction and implementation of IFRS has not only brought advantages with it! In addition to the financial, time, and organizational aspects many companies are confronted with the question regarding the contextual advantages and disadvantages associated with the introduction and implementation of IFRS.
One of the primary objectives of the IAS Board is to facilitate full company transparency, to provide investors and analysts more detailed information and insight into the company. The principle is certainly well intentioned.
However, transparency also means that sensitive data is provided to the competition. Possibly disclosing company internal market developments, segmented sales successes or even strategic intentions!
What level of transparency is demanded, how much is necessary?
A conversion from LOCAL-GAAP (for example: HGB[German Commercial Code]) to IFRS not only means the transfer of the balance sheet and P&L, rather it has a significant effect on:
- the internal organization
- existing ERP systems (for example:. SAP, Oracle, Navision, PeopleSoft,...)
- existing interfaces to other systems
- laboriously developed business processes
- company internal accounting policies
- decision rationale with regard to the affect of line management decisions on costs and EBIT
These and many other areas are being affected by such a conversion.
High costs and unnecessary extra work in the year of implementation and the subsequent years can be avoided, if important aspects are diligently analyzed and considered in advance A structured operations and implementation plan avoids and prevents many errors and delays.
Within the scope of the conversion project we systematically advise and support you in regard to all relevant questions and issues.
In the preliminary stages we address the short-term and long-term effects of a conversion of company figures, ERP systems, business processes and organization. In addition, we evaluate the effects within the group (subsidiaries).
Together with you we develop efficient solutions, to later be able to smoothly implement the solutions with due diligence.