The IFRS implementation strategy includes 4 stages: knowledge gathering, assessment and planning, initial transition and integrate change.
In the first stage, knowledge gathering, companies should learn as much as possible about IFRS, its implications as well as the progress of IFRS adoption around the world. Specifically, businesses should:
- Keep a tab on changes that can occur in the IFRS transition landscape.
- Monitor and manage IFRS adoption of subsidiaries, but also keep watch on the movements of partners and competitors.
- Find out whether business dealings with counterparties who are increasingly interested in IFRS accounting outcomes will be affected.
In the assessment and planning stage, companies should take a closer look at IFRS and how it will affect the whole organisation. The steps include:
- Identify and consider the impacts on business, accounting, tax structure, financing, long-term contracts, investors, systems, controls, workforce issues etc.
- Perform strategic thinking and planning while incorporating IFRS adoption expectations.
- Utilise scenario planning.
Moving on to the next phase, initial transition, businesses should by then identify aspects of IFRS convergence (if it is to be used alongside another set of accounting standards) and conversion that will take the longest. Hence, companies should:
- Consider taking small steps to address controlled one-off projects where possible first.
- Evaluate differences in accounting standards for specific financial statement line items.
- Evaluate accounting policy alternatives.
- Select IFRS accounting policies.
- Perform the initial transition.
- Create IFRS financial statements during the dual reporting period.
- Perform in-depth assessments of operational issues.
- Ensure constant stakeholder communication.
The final stage, integrate change, is when the whole project goes live and IFRS is embedded as the primary financial language. This phase is critical as IFRS changes should be smoothly incorporated into everyday operations, processes and accounting systems. Companies should ensure:
- IFRS concepts are part of daily routines rather than additional workload.
- Internal controls are in place to help minimise error risks.
- IFRS transition is aligned with the company’s long-term operational/process goals.