SAP

Adoption of International Financial Reporting Standards( IFRS) is one of the most singnificant challenges faced by all entities worldwide. IFRS requires disclosure of large amount of information to be reported as part of the financial statements and the notes to accounts. This creates need for new data, changed calculations and changes in reporting requirements. IFRS conversion projects are often viewed as finance specfic projects. However, these projects impact finance, accounting, information system and human resources. Adoption of IFRS can provide opportunuties for achieving synergies with other IT projects and strategic intiative.

On adoption of IFRS, an information system is required to capture, analyze and report new data in the format as required. It necessitates hanges to be made in the present IT/process landscape.The process of aliging the information collected according to the Local GAAP requirements with the IFRS is one of the key issues on adoption/convergence of IFRS.The conversion to IFRS is fraught with complexity due to -

• Intricacies in the technical accounting standards themselves
• Domiciles of organizations
• Local and international regulatory requirements

The impacts on information systems fom conversion to IFRS arise from difference in the accounting treatment between current accounting standards and IFRS. This may create a need for -

• New data
• Changed calculations
• Changes in reporting

To facilitate these changes, information systems may need to be implemented, modified, re- mapped or reconfigured. To enable the organisation to succeed, it is vital that the IFRS conversion project refects holistically the true impact on the organisation - it far more than just numbers.Following are the main steps involved in converting the existing IT sytem land scape to IFRS complied system:

Evaluate :
The first step in the adoption of IFRS is to find out the standards applicable for the company. This will help to understand the additional information to be captured and reported. Evaluating the existing situation will help the entity to assess the impact of IFRS on the people, process and technology. To assess the impact of IFRS on the information system, an organization shall have a good level of understanding about the accounting level differences, impacts and risks associated with the adoption of IFRS. It is a time consuming process. The success of adoption depends on how the accounting differences are translated to technical system specifications.

Envisage:
After assessing the current Information System capabilities and projecting the future requirements, next step is desiging the new Information System. Adoption of IFRS necessitates the need for new information. The entity may be required to capture new data or change the calculations. Evaluation of existing systems helps to findout whether existing systems can be modified or altered to meet the suggested system changes.

Excel:
This is the ultimate stage of the whole process. Inputs required for this stage are - project plan, revised processes & procedures, revised business blue print, transition document etc. Key activities in this stage includes Implement changes in the applicable systems,System integration test and user acceptance testing, Map the changes to transition document and obtain sign off,Parallel run systems in Local GAAP and IFRS, Refine internal and external reporting, Strengthen controls over newly implemented strategies and Cut over and switch to IFRS.

To summarize , an IFRS adoption project is much more than just a Finance/accounting project . It encompasses a complete busines trasnsformation and hence there is a need to have a holistic approach and participation from all stakeholders.