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More IFRS Casualties: Revenue Recognition, Banks' IT Structures

Complex IT architectures will hamper banks' IFRS compliance.

The proposal for the U.S. to adopt global accounting standards would bring some necessary expenses for domestic companies - changing internal report systems and paying for additional

The proposal for the U.S. to adopt global accounting standards would bring some necessary expenses for domestic companies - changing internal standard report systems and paying for additional training for accountants, to name a few.

However, as KPMG's Brian O'Donovan writes for Accountancy Age, another potential cost would be the impact on and under the revenue recognition principle. Should the Financial Accounting Standards Board and the International Accounting Standards Board agree to converge U.S. IFRS vs GAAP, there is still some uncertainty on how the decision would affect the "amount or timing of their revenue," he says.

Under a universal accounting rule for instance, the construction industry would be able to maintain its current system of recognizing revenue as a construction project progress, instead of the proposal to only recognize it once the work is finished.

Financial institutions would also be forced to make major adjustments in order to comply with IFRS. IT Pro Portal reports that with many banks running on "disconnected computer systems," the FIs will have to overhaul their IT infrastructure to create a network that connects departments and facilitates the IFRS-mandated fair value reporting.  

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