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Five Tips for Implementing IFRS Standards

Five ways companies can prepare for new IFRS regulations.

Although companies have until January 1, 2015, to fully implement new International Financial Reporting Standards, it's never a bad idea to get started on such a massive overhaul early. Still, a great many companies have barely begun to make the transition. A recent survey from staffing agency Ajilon found roughly 58 percent of CFOs and financial staff at U.S. companies would be unprepared to train new team members in IFRS.

Part of the reason for the reluctance could be a perception that the changes won't have a positive impact on businesses. According to auditing giant Deloitte, most major firms believe IFRS will "less accurately reflect the results of their organization and will increase the volatility of reported earning."

Regardless of whether a company is ready, or whether management believes the new standards will be beneficial, the changes are coming. Here are five things every company should do to prepare.

Ready IT Systems

To accommodate reporting changes under IFRS, some automated IT systems may have to be altered to reflect the new standards. Working closely with tech departments, CFOs and accounting staff need to evaluate which systems will work and which will need to be overhauled. According to AccoutingWEB, some of the transactions that might be affected include leases, fixed assets and research and development costs.

Discuss Impending Changes

Though IFRS deals primarily with accounting practices, the changes are likely to impact a broad swath of a company's business activities, according to Canadian business law firm McCarthy Tetrault. Some of these areas could include IT systems, executive compensation or investor relations. Companies should include a breakdown of IFRS changes in their yearly management discussion and analysis reports.

Understand Current Reporting Concerns

By analyzing their current accounting practices and identifying areas of increased activity, such as heavy investment in research and development or large annual resource purchases, companies can better understand which areas of IFRS might present more challenges during transition, suggests AccountingWEB.

Be Aware of Deadlines

As with failure to meet most deadlines in the business world, a late IFRS financial statement carries some significant penalties. According to the Ontario Securities Commission, it could constitute a violation of securities law. Though implementation is years away, companies that rest on their laurels may still be caught unaware by the transition.

Keep an Eye on Regulators

The Securities and Exchange Commission has already changed the date of implementation once. Savvy CFOs might want to keep an eye on any announcements coming out of the agency to make sure their own plans stay on course.