International Financial Reporting Standards

Worries about IFRS audit burdens mount

Jim Kim — Thu, 30 Oct 2008 08:36:53 -0400

Given the ongoing financial crises, concerns about the transition to International Financial Reporting Standards have taken a back seat, but not completely. There is mounting concern about the principles behind the new standard and what it means for the audit process, this at a time when a lot of companies have just hit a steady state regarding Sarbanes-Oxley and audits.

The general concern seems to be that the lack of hard-and-fast rules will lead to a much heavier disclosure burden--not to mention auditor bill. The classic example, given by Financial Week, is leases. Some are treated as a cost, some are treated more as an investment. Under GAAP, there is a specific test, but under IFRS, the issue is determined by intent. This could get tricky and make more than a few auditors antsy. Multiply this against all the other issues, and we're looking at an onerous process.

For more:
- here's the article

What to ask your auditor

Jim Kim — Thu, 16 Oct 2008 11:47:28 -0400

If you are not happy with your auditor, stewing about it until you're neck deep in an audit is not a solution. To make sure your auditor is on its game, you need to be asking the right questions. The Pittsburgh Business Times offers a look at the top questions you should ask right now.

Remember, you are not above learning from your competitors and you have nothing to gain by being shy. Some of the questions include:
> What are my peers doing to make sure they are in compliance?
> Based on the work you've done for me, are there any theft, shrinkage or internal leaks in my business?
> How will the shift to International Financial Reporting Standards for public companies impact my business and my technology systems?
> What resources can you provide to keep my company's audit committee members abreast of new developments in the field?

For the full list of questions you should ask:
- read the Pittsburgh Business Times article

Related Article:
Internal auditors expanding scope of duties

Calculating IFRS readiness

Jim Kim — Sat, 11 Oct 2008 08:20:30 -0400

Jefferson Wells, a professional audit services provider, has developed an online calculator designed to help companies assess their readiness for International Financial Reporting Standards (IFRS) adoption. The tool is also aimed at spurring discussion and debate. Of course, if a firm picked up the phone and dialed the Milwaukee-based company, that would be fine too. The calculator steps through 18 questions to help determine when a company should begin the transition process among other things. My guess is that few companies have really invested in the transition. Hopefully, that will change rapidly.

For more on this new tool:
- here's the article

A delay in IFRS timetable release

Jim Kim — Thu, 02 Oct 2008 12:59:54 -0400

Just two weeks ago, international financial reporting standards (IFRS) was a big deal. Companies were anxiously awaiting word of a concrete timetable, one that the SEC had promised. But then came the pyrotechnics on Wall Street, and the promised release of the timetable never happened. No one is quite sure when it is coming. However, CFO.com suggests that the issue isn't the credit crunch, which would be easy to assume. The real issue may be that opposition has cropped up as of late. The article notes that Public Company Accounting Oversight Board member Charles Niemeier has spoken out against IFRS. Investor advocates are also making their views known. The timetable, and thus the actual implementation, likely will be delayed even more as the election--and all the turnover that entails--looms large.

For more:
- here's the CFO.com article

The impact of IFRS on your IT systems

Jim Kim — Sat, 27 Sep 2008 08:40:01 -0400

Everyone should accept International Financial Reporting Standards, warts and all, as a reality. Adoption is fait accompli. It's only a matter of time. KPMG's timely report on the information systems impact of IFRS is thus a timely read. The technology costs of conversion are likely to be significant, the reports finds. It also notes that a shortage of IT professionals with "the ability to interpret and translate the IFRS requirements into IT changes and solve the technical issues involved in the conversion" will be a problem for many. It is time to gear up. Costs will likely rise across the board, from system modifications, support, additional resources, training and so on. Auditors will need to be factored in. In addition, Sarbanes-Oxley controls cannot be blindly assumed to still apply. Some may need some tweaking. Tax reporting systems will have to be thought through.

For more:
- here's an article in accountingweb.com

A quid pro quo for IFRS adoption?

Jim Kim — Thu, 03 Jul 2008 09:32:10 -0400

The big issue right now in the accounting world is International Financial Reporting Standards (IFRS). There's a whole lot of anxiety about when companies will have to comply. One idea that cfo.com mentions is a moratorium on new accounting rules, to give companies a fighting chance of implementing IFRS in good form. The changeover will be massive--a fact not lost on the rule makers (we hope)--and will affect just about all touch points in the reporting cycle, including Sarbanes-Oxley to some degree. Systems and processes and controls will have to be tweaked. Costs will rise. Most assume that the change will require two sets of books for a few years. One issue is whether this moratorium will hold for small company 404(b) compliance. It would mark yet another delay, but would certainly make IFRS adoption more palatable to nonaccelerated filers. We'll see if the idea has legs.

For more:
- here's the cfo.com article

These are busy times, don't forget XBRL

Jim Kim — Thu, 03 Jul 2008 09:31:32 -0400

For the moment, International Financial Reporting Standards (IFRS) is at the top of everyone's worry list. But a Compliance Week survey reminds us that the SEC has published a proposal to mandate XBRL for all companies by 2011. Fortune 500 companies would be required to adopt as early as next spring. This major reporting technology and IFRS would be quite a one-two blow: new numbers and a new way of reporting them. You would be wise to get your head out of the sand on XBRL. Unfortunately, the Compliance Week survey found 80 percent of company respondents said "nobody on their staff is well-versed" in XBRL. And 59 percent said "they either have just begun reading up on the technology, or have done no research at all." This could easily bite you. Time for a reality check. Here are the survey results.