What's Going on With IFRS? (International Financial Reporting Standards)
IFRS, GAAP and Changes to Expect in Reporting. International Financial Reporting Standards, better known as IFRS, have been essentially adopted by most of the modern business world globally except three countries: the U.S., India, and Japan.
In terms of new IFRS information, the U.S. has not changed its stance, still staying to Generally Accepted Accounting Principles, or GAAP. That said, Japan on the otherhand is slowly migrating to IFRS with a target date of 2015 in terms of adoption. India is expected to adopt IFRS three years later. The U.S., however, is still discussing the matter via its Financial Accounting Standard Board or FASB. This is nothing new; FASB has been contemplating IFRS for years without movement on the matter.
Some optimists expect that the FASB will eventually adopt some kind of h
ybrid between GAAP and IFRS, but even that will be a slow process of change with progressive GAAP amendments if it takes place. The four areas where there seems t
o be the most movement include leases, financial statements, revenue recognition and financial instruments. The timelines of movement are as follows:
- Revenue recognition changes are expected to be finished in 2012 but adoption won’t be promulgated until likely 2015.
- In terms of leasing, work is still being performed on new rules drafting. The work is calendared for completion in 2013.
- Financial statement reporting has no movement whatsoever or any sign of engaging in the matter either.
- Financial instruments are completely complicated by major changesalready in play from new federal laws, pending federal laws and regulations, and more boondoggles encouraging yet new federal changes again. The most prominent issues germinating more law changes include JPMorgan Chase’s major trading mistake of $2 billion and the Greek sovereign debt problem in Europe.
There is a large expectation that the Securities Exchange Commission will eventually push the FASB to incorporate IFRS into the existing U.S. GAAP system via accounting standards updates. Aside from the above sections, the rest of IFRS will simply become a process of practice through industry accounting rule changes.
When these accounting rules eventually come through via GAAP updates, companies with expert help that already understands the effects of IFRS will have an adoption reporting edge. Linium can provide this edge; reducing the amount of time it will take a company to adjust in terms of accounting reporting. Bringing in this kind of accounting standards expertise and familiarity is the best way to reduce change risk in the financial arena, particularly with standards that require transparency per federal law.
While full IFRS adoption might still seem far away, the IFRS transition is a process that has to be in place three years before the date of actual conversion. Organizations should therefore start evaluating the impact IFRS will have on their systems and processes today. Our Oracle implementations have been addressing IFRS requirements for many years with a variety of solutions that can assist with the transition to IFRS. In the over 100 countries already required or permitted to use IFRS today, many organizations are already using Oracle solutions to comply with IFRS requirements.