IFRS for SMEs

As the majority of the world accepts IFRS, the U.S. is one of the last countries to adopt IFRS. Not conforming to these new rules could result in the U.S. losing its place as a major economic player in the global economy. The IASB has prepared a less complex version of IFRS called IFRS for SMEs. This set of standards is less complex, easier to apply and are designed to be less stringent than national GAAPs and full IFRS. A full version of IFRS for SMEs can be downloaded at the IFRS.org website. The SEC is expected to finalize its official road map in the Summer of 2011. From there the tentative plan is to have full convergence by 2016. Our recommendation is to begin planning and preparing for this shift now so you can budget for the necessary changes, update your accounting software and your executive and financial staff. IFRS for SMEs is an accepted form of financial reporting today and could have significant advantages for your company. Our IFRS team can work with you to assess, plan and execute your IFRS convergence. Contact us to get started or read on for more specific information. You can always keep on top of the latest news on our "Going Global" blog or at the AICPA's www.ifrs.com.

What industries will IFRS Impact?

  • Immediate impact: publicly accountable enterprises, government enterprises.
  • Subsequently will trickle down to: pension plans,nonprofit organizations, private companies, including; manufacturers, distributors, construction and real estate,
IFRS Impact On:
  • Accounting Software Systems - Most likely your current accounting software system is not set up to collect and generate reports that will be required by the new standards. As a Microsoft partner through our technology affiliate, BCG Systems, Inc. we have the resources and guidance you need to help your organization be prepared.
  • Loan Covenants - IFRS will likely impact your company's loan covenants due to differences in the recognition of revenue and financial reporting. We have been working to educate financial institutions on how IFRS will impact their client relationships. When entering new agreements or restructuring your old ones, it will be important to reflect the new standards or place wording into pre-existing loan agreements that stipulate compliance with standards as they are written today. We can work with you and your lender to understand the new IFRS rules and how to keep your agreement in good standing.
  • Revenue Recognition - GAAP allows for variances in the way revenue is recognized across industires. IFRS applies a more broad approach to recognizing revenue which may be beneficial for certain situations. We can help you assess which reporting methods benefit your company now and what will be required of you in the future. In certain cases reporting under IFRS now can be beneficial.
  • Lease Accounting - This is one area where U.S. GAAP and IFRS has significant differences and stands to impact a wide range of organizations. This will impact all organizations that lease everything from real estate to office equipment. One of the major changes will be the requirement to recognize all lease obligations on your balance sheet. If you do any kind of leasing we can work with you and your accounting team to get up to speed on the new requirements and help put in place the technology and processes to comply with the IFRS principles for leases.
  • Tax Reporting - These new rules will not only have and effect on your financial statements, it will also have a impact on tax accounting methods. It will be important for your tax team to understand the differences in reporting methods to ensure proper treatement for tax reporting.
  • Mergers and Acquisitions/Business Valuations - Business valuations done using IFRS financial statements versus GAAP will likely change the valuation of a company. One major change will be the way you value and report intangible assets. If you are entering an M&A transaction you will need to understand the impact that IFRS may have on the agreement in the future or use IFRS to prepare your contract today. This could be advantageous for both parties and we can help you decide as the seller or the buyer how to use IFRS to your advantage and create deal structures compliant with IFRS.
How we are helping SMEs adopt IFRS:
  • Assessments - The first step in this process is to sit down with your financial team and assess what areas IFRS will impact your company and establish an action plan and timeline for getting your organization educated and on track for convergence.
  • Executive Advisement - Since IFRS is more principles based than rules based (GAAP is rules based) there are alternative choices to make about what accounting procedures you will implement. Making the right decisions from the beginning will be important to keeping your systems consistent. Our certified advisors will work with your company to advise you on which choices will be the most beneficial to your organization.
  • Putting IFRS in Action - Once you understand the areas of impact we can map out a plan that includes who will need to be involved and trained, including key staff, board members, share holders, etc. Our certified IFRS consultants will work with your staff to train them and work with them as the prepare their first IFRS financial statement.
  • Technical Systems Analysis and Support - Assessing your current technology's capabilities will be key to generating and collecting the data needed for reporting under IFRS. Our technology advisors will sit down with you and your IT staff to assess your current software situation and prepare a recommendation for software needs.
  • Educaton and Training - Since IFRS conversion will impact everything from your employee benefits to your financial statements to your accounting systems it will be imperative to teach and train all members involved on the differences, what to expect and how to make the transition. Our certified IFRS team will work with your team to train and advise them on how to begin preparing for and working with these new standards. Getting on board with training and education as soon as possible will be very beneficial as a business and can save a substantial amount of money and time in the long run.
  • Controllership / CFO services - Companies will need to assess their internal skill and knowledge levels of IFRS so they can plan for training and education. In addition to our training and education courses we can also serve as an interim CFO or controller during the beginning stages of your conversion so you can rest assured you have a certified expert on hand for questions and advisement.

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