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On November 14, 2008, The Securities and Exchange Commission released a "roadmap" containing milestones, which if achieved, could lead to the mandatory adoption of International Financial Reporting Standards (IFRS) by U.S. issuers beginning in 2014. Large U.S multinational companies meeting the requirements outlined in the roadmap will be allowed to early adopt IFRS for their fiscal years ending on or after December 15, 2009.

The roadmap outlines seven milestones leading to the mandatory adoption of IFRS by U.S. issuers. In 2011, the SEC will assess progress of reaching certain milestones and will decide whether to require mandatory adoption by all U.S. issuers.

Potentially, mandatory adoption will be phased in, beginning with large U.S. companies in 2014, followed by mid-sized companies in 2015 and small companies in 2016.

To be ready, companies must begin the transition planning process now, to allow for a smooth conversion.

What CFOs should be doing now to prepare for conversion

Most are aware that change is on the horizon but what does that mean for CFOs and their organizations? It is key for CFOs to know that it will be up to them to bridge the difference between U.S. GAAP and IFRS by creating guidelines for their companies. There are some key things that CFOs should be doing to ensure a smooth, cost-effective transition.

1. Become more literate about IFRS and conversion developments
   
   Key resources include the SEC’s website (www.sec.gov) and the International Accounting Standards Board’s website (www.iasb.org). Both provide regular updates on the convergence as well as information on the standards.
   
   
2. Understand how conversion will impact the finance department, as well as all operating aspects of your organization
   
   The organization needs to assess the areas that the conversion will impact, based on the differences between U.S. GAAP and IFRS. CFOs will naturally become the leaders in this process.
   
   This assessment should include a review of all current accounting policies of your organization and how the transition to IFRS will impact them. In addition, all information systems that management relies on, including financial reporting and budgeting systems, will need to be assessed.
   
   It is important to include individuals from all aspects of the organization to ensure that all implications are identified.
   
   
3. Develop a cost-effective implementation plan to ensure compliance with proposed transition timetables
   
   It is important to develop a well-defined implementation plan that fits your organization. Plans will vary greatly depending on the size and complexity of your organization so it is important to develop one that achieves your goal while keeping cost in mind. The plan should include the key people involved, define their responsibilities and a set a timetable for conversion milestones.
   
   Some key considerations your plan will need to address include:
   
   
   • Training of all staff that is affected by the changes.
   • Resources to allow for the parallel running of U.S. GAAP and IFRS accounting systems.
   • Dry-runs of new IFRS systems and processes to iron out problems and weaknesses.
   • Adequate resources to answer technical questions relating to the transition.
   
   
4. Implementing and communicating necessary cultural changes that are a result of conversion
   
   As with all organizational changes, communication with interested and potential investors is essential. They will need to understand what impact IFRS will have on your organization, how the organization is addressing the transition and what impact the transition may have on their investment.
   
   Also, it is important to consider the implications of the change to IFRS for corporate governance and the structure of the organization. Members of your governing boards, including audit committee, should be included in the conversion process early on and educated on how the conversion will impact them and the organization.

How Amper, Politziner & Mattia, LLP can help

To assist in implementing your conversion, the International Services Group at Amper has developed a simple and effective IFRS conversion methodology that enables us to work collaboratively with your organization throughout the transition period.

Phase I: Conversion Assessment – Amper will help your organization identify the differences between its U.S. GAAP accounting policies and IFRS. The assessment also identifies other areas of the business that will be affected by the conversion. It will provide your organization with a full view of the potential impact of IFRS on your organization.

Amper can help you:

• Determine at a high level the areas where business practice may be affected by IFRS financial reporting requirements, the major differences between IFRS and U.S. GAAP and industry-specific issues.
• Highlight key accounting issues and any potential issues that should be addressed early.
• Identify the main business impacts anticipated from the adoption of IFRS.
• Assess at a high level the likely impacts on information technology systems.
• Identify any hurdles to conversion presented by the existing finance organization.
• Raise awareness of the IFRS issues within an organization’s finance community and give momentum to the IFRS conversion project.
• Provide recommendations on the structure and approach of the overall conversion project.

Phase II: Design and Planning – Amper will take the results of the initial assessment and translate them into a well-defined implementation plan. This plan will establish your conversion team and define their roles and responsibilities. The plan will include a customized implementation timetable with milestones that will enable the organization to monitor your conversion progress and ensure meeting your conversion timeframe. .

Phase III: Solution Development – Amper will help you address technical options, systems and processes most appropriate for the organization. Setting up a specific project team is a necessary step so that the business functions can continue to run effectively while the transition project is managed to a successful conclusion.

Phase IV: Implementation and Execution – In this phase, Amper can help with process changes, training and helping ensure that policies and manuals reflect the new reporting requirements.

Phase V: Post Implementation Review – In this phase, we help management maintain reporting integrity and avoid surprises by evaluating how well the organization adheres to policies, procedures and controls arising from the conversion, and by identifying any unresolved issues. In this phase you will continue to fine-tune the conversion, update and train relevant staff and continue investor communication initiatives.

Contact: Brian Downey
International Services Group
(732) 287-1000