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Preparing U.S. Companies for the Transition to International Financial Reporting Standards (IFRS)
Presenters Name Presenters Title
Agenda
Countries that require or permit IFRSs Countries seeking convergence with the IASB or pursuing adoption of IFRSs
Impact on US Companies
Proposed implementation timeline from the SEC
2009: Limited group of large US firms are permitted to use IFRS on an optional basis for fiscal periods ending on or after Dec 15, 2009
2009
2010
2011
2012
2013
2014
2015
2016
2011: SEC evaluates achievement of roadmap milestones and decides whether to adopt a mandatory approach for IFRS
Impact on US Companies
The value of starting early
Growing awareness of complex requirements Cumulative Reporting Requirements
Companies are required to retrospectively apply IFRS to all periods presented as if they had always been in effect.
No one anticipated how big it was going to be. Every company was too late and too slow in preparing even the good ones.
Ken Wild, Global IFRS Leader, Deloitte
Impact on US Companies
Start early for transition period with multi-GAAP
2009: Limited group of large US firms are permitted to use IFRS on an optional basis for fiscal periods ending on or after Dec 15, 2009
Transition Date? While IFRS requires 2 years of 2014: Large comparatives, best practice accelerated recommends 5 filers begin
filing in IFRS
2009
2010
2011
2012
2013
2014
2015
2016
2011: SEC evaluates achievement of roadmap milestones and decides whether to adopt a mandatory approach for IFRS
IFRS
US GAAP
Segment Reporting
IFRS
Fixed Assets & Investments None Control Proportional OK Capitalized No LIFO 1 Step, Reversible
US GAAP
Only Certain Fixed Assets Rare (Negative Goodwill) 2 Models Only Equity Expensed LIFO OK 2 Step, No Reversal
Industry-specific Considerations
Areas of Potential Concern IFRS Change Area: Financial Services High Tech Retail Communications Utilities CPG Life Sciences
PPE = Property, Plant, & Equipment R&D = Research & Development FV =Fair Market Revaluation INV = Inventory IMPAIR = Impairment M&A = Mergers & Acquisitions
PPE
R&D
FV
INV
IMPAIR
M&A
Agenda
Monitoring IFRS standards since 2000 Active member of IASB IT Company Discussion Group
Attend the Standards Advisory Council (SAC) meeting three times a year Provide input on practicality Get a heads up on features needed
Energy
Industrial
Retail
Life Sciences
Services/Other
Assess Impact
Determine Strategy
Oracle Enterprise Performance Management Oracle ERP Financials Other ERP Financials
Custom or Legacy
FLEXIBLE REPORTING Easy to reconcile and trend GAAP vs. IFRS results
Impairment Processing
Impairment identification Unplanned depreciation
COMPLIANCE WORKFLOW
APPLICATION CONTROLS MONITORING Single subledger transaction creates multiple accounting representations
Control changes to ERP applications
COMPLIANCE DASHBOARDS
Monitor status of testing and exceptions
Capitalize R&D Move those 2009 Development expenses to the Balance Sheet recognize in P&L, matched to Revenue, in 20102011
Agenda
Key Takeaways
Use the benefit of a realistic implementation timeline dont wait for the pressure of mandatory deadlines IFRS resources are scarce start planning and education sooner rather than later
Start Early
Leverage Technology
Push changes into general accounting with Oracle ERP Financials Document and test IFRS controls with Oracle GRC
Consider how to optimize your business and gain competitive advantage through IFRS Align your business model with the new capital market model
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To Learn More
In Person Events
IFRS Briefings with PwC and Oracle: http://www.meetpwc.com/IFRSNorCal
Webcasts
Upcoming PwC-Oracle IFRS webcasts (Dec 2008 - March 2009) : www.meetpwc.com/OracleIFRS Dec. 9th on CFO.com with customer Pearson, publisher of Financial Times: http://www.cfo.com/webcast.cfm?webcast=12500164&pcode=ORA120908_Oracle
Whitepapers
Preparing US Companies for the Transition to IFRS Managing the Transition to IFRS