From the Sage MAS Team

[#1]

Whether it's because of the troubled world-wide economy or the interest to push policy forward in advance of the upcoming Obama administration taking office, IFRS (International Financial Reporting Standards) is getting a fair amount of attention these days. As mentioned in AccountancyAge, SEC chairman Christopher Cox is set to disclose additional details surrounding the US journey toward IFRS adoption this week. The last time the SEC provided guidance on the IFRS roadmap was back on August 4th of this year. 

While most articles I have read indicate US adoption of IFRS is inevitable, the earliest date the SEC proposes for mandatory IFRS adoption in the US is 2014. In addition to making certain there are clear milestones established for a successful transition, there is ongoing concern regarding gaps between IFRS and US GAAP. Some of the big rocks include:

• IFRS does not permit Last In First Out (LIFO) as an inventory costing method
• IFRS uses a single-step method for impairment write-down rather than the two-step method used in US GAAP, making write-downs more likely
• IFRS has a diffrent probabilility threshold and measurement objective for contingencies
• IFRS does not permit curing debt covenant violations after year-end
• IFRS guidance regarding revenue recognition is less extensive than GAAP and contains relatively little industry-specific instruction

But most notably, many argue US GAAP is the "gold standard" when it comes to detail. While IFRS continues to close, umm... gaps with GAAP there is still more than just granularity separating the two standards.

Sage MAS and IFRS

Gaps aside, IFRS will be a standard affecting all US companies at some point. Who will it affect first, and what should Sage MAS customers plan for as the SEC moves forward with its stated roadmap?

The best way to understand who IFRS will affect first, really comes down to geography. Organizations in the US who roll-up financials to a foreign-based parent will be first, most probably followed by our Canadian customers (Canada plans to adopt IFRS by 2011). Sage MAS customers should keep abreast of the SEC's guidance on IFRS (and of course follow this and other blogs on the topic) for indication of major milestone definition toward rollout adoption of IFRS.

From a product standpoint, rest assured, Sage MAS products will support IFRS accounting standards. While we already have folks working on this effort, it's a bit premature to detail dates for product support of IFRS. As we get a bit farther along in our project efforts, I'll post updates here. 

Lastly, here are are few resources to assist you in your IFRS education and news gathering:

AICPA's IFRS Backgrounder

AICPA's IFRS news page

SEC's IFRS Roadmap

Message Edited by morps on 11-06-2008 04:10 PM

[#2]

I also found this information from PWC very interesting especially the interactive financial statements demo.

http://www.pwc.com/extweb/pwcpublications.nsf/docid/598E9D7EDF5239A0852574AB00659431

[#3]

Glad to see a discussion started on IFRS. I read an article recently in Financial Week about a survey conducted by Protiviti indicating that half the respondents weren't thinking much about the transition to IFRS. I think it's going to happen, and 2014 seems to be what most believe will be the mandatory adoption date for larger publicly-held companies, with mid-size and smaller companies to follow. And I don't think it would make sense for public companies to be preparing financial statements under IFRS while privately held companies follow GAAP, so I really see this movement to IFRS as an issue of "when", and not "if" for all companies. In light of this, and the fact that there could be some real significant changes to financial statments and business processes as a result of a move to IFRS, I think it would be in the best interest of all companies to begin looking into this by first talking with their accountants and assessing the impact, and then creating a transition plan. Educators are already making changes to their curriculum to include IFRS principles, and I think companies should also begin to think about sending their staff off for some IFRS training. I'll admit, I'm an accountant, and I'm very excited! This is going to be one of the most significant regulatory changes in accounting history - and you can bet we at Sage Software will stay on top of this and will be assisting our customers through this transition, and as you said Mike, we are looking into the differences between US GAAP and IFRS and will be making any necessary changes to our products to ensure they are fully compliant with IFRS.

[#4]

Mike this is a great post.

I wonder how many additional rules and regulations will be thrust upon us by this latest financial meltdown.

I am betting that all prior financial reform (SOX included) will pale by comparison to the financial reforms that legislators will introduce.

[#5]

As a friend of mine who has a full time job thanks to SOX, call this, the Accountants Full Employment Act of 2010.

We have more regulations and requirements than you can shake any kind of stick at and yet we still get the Bernie Madoff's of the world.  The FBI says there may be 100's more as they send 200 full time people into investigation mode.

I say stop making jobs digging holes and filling them (i.e. SOX compliancy and IFRS) and instead enforce the laws we already have on the books which these crooks obviously laugh at.

Mark Chinsky

www.clientsfirst-us.com

Clients First Business Solutions

[#6]

Hi Mark,

Can't say I disagree with you. Good news is the current SEC chair has other priorities, though they look, breathe and smell a lot like more SOX stuff: (a href="http://community.sagemas.com/t5/Mike-Morper-Says/Hurry-up-And-Wait-IFRS-Compliance-In-US-May-Be-A-Bit-Farther-Off/ba-p/3863#A32">last blog post on IFRS)