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Is the CFO disturbed by the dual turbulence of Cloud and Compliance at the same time - Part I

The CFO plays a very significant role, in the success of the Organization, and his ownership in driving shareholder value are immeasurable. Knowledge of competitors, managing pricing, M&A opportunities, optimizing investment portfolio, keeping up with regulatory changes and of course the changing IT landscape in the ERP space  are just some of the investment, reporting, and accounting related challenges he meets.

So what is that is keeping the CFO awake at night in 2016

a. Changing Compliance Standards

  1. Changing IT Landscapes

While there are cost pressures in the market which is driving a CFO to evaluate options available for ERP Cloud, there are also Compliance pressures with changing accounting standards which is demanding for a transformation to enable future scalability. 

Behind every cloud there is another cloud is what the CFO has started believing due to the growing and dynamic compliance needs.   IFRS 15 and IFRS 16 are effective in 2018 and 2019 while the organization is undergoing a Cloud journey in the existing ERP Landscape. 

As part of this white paper let us list out a secured passage for the CFO to look at a combination of cloud migration ensuring compliance to the changing standards.

Adopting a Cloud based environment

Cloud offers an alternative model, where IT services are sold as a commodity model. A consuming organization may only pay for the part they have used, make cloud a cost effective model.

In today's world CFO's are becoming more and more focused on


  • Improving the existing Working Capital and churning cash on Hand

  • Decrease on Capital Expenditure

  • And Value realization with optimized Finance processes and  High ROI

The latest transformation, facing an organization is the movement from internal supported business management applications,  - ERP,CRM and LOB  to cloud based landscapes. While the cloud based applications provide a subscription based models to implementation and license costs providing a cost effective model for an organization is clearly the primary reason while Scalability, risk mitigation, Compliance, or operational efficiencies may be higher priorities. There are significant concerns around specifically


  • Lack of Control

  • Lack of Skillsets

  • Lack of Transparency

  • Vendor Lock-in

  • Reliability and business continuity

Changing Compliance Standards

Both U.S. GAAP and IFRS are undergoing profound changes as the FASB and IASB replace existing standards with common standards that bear little resemblance to current rules.

Recent changes has been in and around the following two standards to be adopted by 2019.


  1. Revenue Recognition as per IFRS 15 for all Contractual revenue's, to be adopted by 2018.

  2. Leasing standards as per IFRS16 to be adopted by 2019.

Organizational Impact of IFRS 15 and IFRS 16

People


  • Training

  • Investor Relations

  • Financial Statements and Metrics

Process


  • Compliance

  • Data Collection Control

  • Reporting

  • Tax Impacts

Project Management


  • Implementation Strategy

Technology


  • IT Change

  • Contract

  • COA Change

  • Data Collection



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