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Five Steps to IFRS

A carefully planned implementation of IFRS can make the transition less painfu

Public companies, particularly those with operations in other countries, are familiar with the debate over whether to adopt the International Financial Reporting Standards, which are used in many places outside the United States.

Multinationals are already familiar with the standard, but organizations that have only reported according to the U.S. standard of Generally Accepted Accounting Principles will need to do (and spend) more if they have to change their accounting processes.

According to members of the Institute of Management Accountants, writing in Strategic Finance Magazine, there are five steps companies can take to adopt IFRS. Businesses will first need to take time to research what aspects of the business will be impacted by the move to IFRS. Create a team to head the transition, with the CFO at the helm. Next, take stock of the differences between GAAP and IFRS, and how the new standard will affect contracts, compensation agreements and other things related to accounting.

The third step marks the beginning of the program design process - survey the costs, effort and benefits of the project, the authors advise, then draft a timeline and start training. Next, test out the new "information flows and processes, both manual and automated, in anticipation of the conversion dates," and make any necessary adjustments. Finally, make the jump with full implementation and track any snags along the way.

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