IFRS Implementation Success Factors

The common theme to successful IFRS conversion projects points the efficiency of planning, implementation and communication. These themes are an integral part of each case of the conversion and can serve as checks for ensuring the value and sound design of each task.
Project management

Strong project management skills are critical to the success of an IFRS conversion project. The project tends to be complex involving people from different departments and domains with varying skill sets in multiple streams concurrently working over the extended period of the implementation. Input of external experts in various areas, system specialists have to be integrated for achieving the purpose.

Given that routine business operation pressures would not abate for the purposes of implementation, it is recommended that a Project Management approach is installed. IFRSlive provides the project management services. Having an expertise on IFRS conversion and with the understanding of the interdependencies—the critical relational and sequencing aspects of the tasks in an IFRS conversion—an important aspect of effective execution will be carried out seamlessly.

Knowledge transfer

IFRSlive is committed to facilitating knowledge transfer throughout the conversion process. Effective knowledge transfer is achieved primarily through two avenues:

• Training— Individuals both inside and outside the financial reporting function, across multiple levels of the company, will require some degree of training on IFRS. IFRS knowledge will be necessary for some to perform their jobs, while for others the understanding will bring clarity around how IFRS may be impacting them (e.g., through new IFRS-based performance metrics or a change in stock-based compensation structure). The level of detail and the timing of the training will impact the quality and volume of the IFRS learning retained.

• Teaming— IFRSlive advisors encourage collaborative working rather than simply outsourcing. This is done to with the company staff to retain the benefits of going through the conversion; they need to work side-by-side
with advisors, learning by doing. This will minimize the learning curve and help ensure that IFRS reporting is repeatable once the conversion is completed.

Changing the Company DNA
Though an IFRS conversion is a one-time event, however many of the changes are not reversible. The DNA of the company changes and should embed IFRS reporting into the fabric of its operations, rather than “patching over” existing Indian GAAP processes. Embedding changes and implementing appropriate internal controls will help minimize the risk of errors and make sure IFRS reporting is sustainable going forward. Embedding will also more closely align IFRS conversion with the long-term operational and process goals of the company.

Reuirement for indian companies

In India companies required to comply with IFRS are required to converge by 1st April 2011.

Whenever an entity retrospectively applies an accounting policy, or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements to comply with IAS 1, an entity’s first IFRS financial statements shall include at least:

three statements of financial position,

two statements of comprehensive income, two separate income statements (if presented),

two statements of cash flows and

two statements of changes in equity and related notes, including comparative information.

IFRS Impact

Convergence to IFRS is not just an accounting exercise, but has enterprise wide impact. Starting from the presentation of the statements, classification of the information in the statements to the way business is run, IFRS would have an impact. Accounting statements are presented at Fair Value. Hence there would be changes in revenues, profits, assets and liabilities. At the time of adoption of IFRS there are options and exemptions available. A judicious election is required as these have impact on the organization continuously

Businesses would have to reformulate their strategies in terms of mergers, acquisitions or investments.

Accounting ratios would change and consequently the debt covenants as well as capacity to borrow would change.

Principle based accounting will require changes in corporate governance and risk management strategies.

Stakeholder’s perception of the entity would change. Share price, Taxation, Employee benefits structure would change.

Business management including Management Information System and the back office would change.

Introduction to IFRS

International Financial Reporting Standards are issued by the International Accounting Standards Board located in UK.

Between 1973 and 2001, the Board of the International Accounting Standards committee (IASB) issued standards which are known as International Accounting Standards or IAS. A Standards Interpretation Committee (SIC) also existed which interpreted the IAS where required. These were called SIC interpretations.

In 2000-01 the Board was restructured as International Accounting Standards Board (IASB), a non profit Delaware Corporation. The IASB in its first meeting adopted the existing IAS and SIC.


The IASB has continued to develop standards calling the new standards IFRS. The International Financial Reporting Interpretations Committee (IFRIC) is the interpretative body of the IASC Foundation.