Early planning can help companies prepare for the ramifications that new International Financial Reporting Standards (IFRS) accounting policies are expected to have on their businesses, according to an accountancy specialist.
Vandana Saxena Pooria, CEO at ‘Get Through Guides’, told Business Times on the sidelines of presenting ‘Challenges in Implementing IFRS’ at a CFO Breakfast Meeting early this week that since Sri Lanka is in a region which is slated to lead the world out of recession and with its high ranking quality accounting professionals can help meet the challenges in implementing IFRS through early planning.
“In the old days we just accounted for goodwill (when selling a firm), but we did not separate goodwill of that firm into its current order book, potential customers, potential orders, current customer base, etc. and under IFRS these need to be entered separately as intangible assets. As such it is important to plan early to account for them,” she told the paper at this meeting organised by Institute of Chartered Accountants and Association of Certified Accountants.
She also noted that since rollouts of new systems must be coordinated to avoid conflict with changes to the accounting systems, project coordination between technology and accounting will be essential. As a result, it is important to have people with technical and accounting skills, as well as project and change management skills, on IFRS impact assessment and implementation teams.
Ms. Poori said that IFRS relies more heavily on professional judgement than clear-cut accounting rules, so the potential for financial misstatement should also be considered. “The unique challenges and risks of IFRS implementation require close coordination with information technology. Adequate planning, sufficient lead times and detailed preparation are all essential parts of the transition,” she added.
At the panel discussion after the presentation, Asitha Talwatte, Partner Ernst and Young noted that by next year firms will complete the IFRS rollout.