In setting their strategies, future IFRS adopters would be wise to leverage experiences of adopters in Europe, Australia and Canada. But also and more importantly at the planning stage, another source of leverage in the process may be leveraging the resources and experience of internal audit and SOX management. Journal of Accountancy had a recent article on this.
Some of the main points:
Based on the current SEC road map, your company will need to evaluate how to perform U.S. GAAP/IFRS parallel accounting over a multiyear period.
In creating a parallel accounting environment, your internal control and operational audit staff may need to consider the ramifications of modifying your company’s systems and processes.
Internal control and operational audit staff are in a great position to assist your company in evaluating impact areas with the IFRS conversion. Their financial and accounting backgrounds, combined with the knowledge of the underlying processes and systems, will provide in-depth knowledge for conversion planning.
It is critical for internal control and operational audit staff to get involved early to help guide the company in the planning and to ensure that their portion of the overall conversion cost estimate is included.
Strategic IFRS Planning Questions for ICFR (SOX) Management
- How many resources should be assigned to the IFRS conversion project team?
- Do the personnel have adequate accounting training to understand the differences between U.S. GAAP and IFRS?
- Can the current SOX 404 process and systems documentation assist the company in estimating change impacts?
- Does the company have sufficient resources/flexibility to handle the increased controls testing?
- What can ICFR staff do to assist with mitigating the risks of change management in this significant conversion process?
- Is there IT knowledge within the department to assist in identifying risks that may arise for system modifications for the parallel accounting period?