Conversion to International Financial Reporting Standards ( IFRS) from US Generally Accepted Accounting Principles (US GAAP) is more than an accounting exercise. For many companies, it can significantly affect the financial reporting for certain aspects of the entity. Hence, the need for proper planning is imperative.
Executives need an early understanding of the potential ways in which conversion to IFRS may affect their accounting policies, people, information systems, and controls. IFRS include a specific standard that sets out all transitional requirements and exemptions available for first-time adopters.
For instance, an opening balance sheet is prepared at the date of transition to IFRSs, which is the beginning of the earliest comparative period on the basis of IFRSs. Accounting policies are chosen from IFRS in effect at the reporting date. Generally, those accounting policies must be applied retrospectively in preparing the opening balance sheet and in all periods presented on the basis of IFRS. However, retrospective application of changes in accounting policy is prohibited in some cases. At least one year of comparative financial statements must be presented on an IFRS basis, and first-time adopters may report initially in either annual or interim financial statements
For more information on getting started, see an article published by The CPA Journal in October, 2009 on “Planning Ahead For IFRS 1” athttp://viewer.zmags.com/publication/742328e2#/742328e2/26