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What Are the Best Tips for IFRS Implementation?

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  • Written By: Esther Ejim
  • Edited By: Kaci Lane Hindman
  • Last Modified Date: 23 November 2016
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    Conjecture Corporation
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Usually, organizations and companies must adopt a generally acceptable form of accounting standard as a means of providing greater cohesion among organizations in different countries in terms of the preparation of various public financial statements from the organizations in question. The main previously accepted method for this financial preparation was the Generally Accepted Accounting Principles (GAAP). Although that method is still acceptable for the most part, most countries have adopted or are in the process of adopting the International Financial Reporting Standard (IFRS), a more recent method for accounting that was created by a private company located in London that specializes in the development of accounting standards. Many companies have consequently implemented the IFRS standards, while others are still trying to implement it. Some tips for IFRS implementation range from an analysis of the rules that guide such conversions in the country from where the company originates to other factors that include the disclosure requirements.

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A consideration for IFRS implementation is the location of the company that is contemplating the adoption of the accounting standard. As of 2012 in the United States, companies are still allowed to use the GAAP method of accounting standard pending a determination of procedures for the convergence of the two methods of accounting standards: IFRS and GAAP. A company that is considering IFRS implementation would have to ensure that applying the IFRS accounting standard to the company’s financial statements would be done in a seamless manner. This means that the company considering IFRS implementation would have to make the conversion from its previous accounting standard in such a way that the change to the new standard would not cause any unnecessary confusion or disruption to the company’s affairs.

Such a step toward easing into the IFRS implementation would necessarily include comprehensive disclosures as a means of explaining the adoption of the IFRS accounting standard to stakeholders, including shareholders. Another consideration for companies applying IFRS implementation is the inclusion of various liabilities and assets as required for the adoption of IFRS. Such liabilities and assets must also be properly classified and measured as required under the IFRS implementation terms. In the United States, something that companies must consider is the date when the IFRS implementation will be adopted, a process that is normally applied at the start of a defined fiscal year when the accounting standard is used to prepare the company’s financial statement.

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