Managing the transition to IFRS-based financial reporting : a practical guide to planning and implementing a transition to IFRS or national GAAP which is based on, or converged with IFRS

274 Pages·2014·1.42 MB·English

Managing the Transition to
IFRS-based
Financial
Reporting
Lisa Weaver
WILEY
Managing the
Transition to
IFRS-based
Financial
Reporting
WILEY
Managing the
Transition to
IFRS-based
Financial
Reporting
A Practical Guide to Planning
and Implementing a Transition
to IFRS or National GAAP
which is Based on, or
Converged with, IFRS
Lisa Weaver
This edition frst published 2014 © 2014 Lisa Weaver.
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Library of Congress Cataloging-in-Publication Data
Weaver, Lisa, 1971–
Managing the transition to IFRS-based fnancial reporting : a practical guide to planning and implementing a
transition to IFRS or national GAAP which is based on, or converged with, IFRS / Lisa Weaver.
pages cm
Includes bibliographical references and index.
ISBN 978-1-118-64374-7 (paperback) – ISBN 978-1-118-64418-8 (ebk) – ISBN 978-1-118-64412-6 (ebk)
1. Accounting–Standards. 2. Corporation reports. 3. Financial statements–Standards. I. Title.
HF5626.W43 2014
′
657 .3–dc23 2014007143
A catalogue record for this book is available from the British Library.
ISBN 978-1-118-64374-7 (paperback) ISBN 978-1-118-64418-8 (ebk)
ISBN 978-1-118-64412-6 (ebk); 978-1-118-64379-2 (ebk); 978-1-118-92483-9 (ebk)
Cover design/image: Wiley
Set in 10/11pt Times by Aptara Inc., New Delhi, India
Printed in Great Britain by TJ International Ltd, Padstow, Cornwall, UK
CONTENTS
Page
Chapter Title No.
List of Tables vii
List of Figures ix
List of Case Studies xi
Foreword xiii
Preface xv
Disclaimer xvii
Acknowledgements xix
About the Author xxi
Introduction xxiii
I: Understanding the Framework of Performing a Transition to
IFRS-based Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1 International Financial Reporting in Context . . . . . . . . . . . . . . . . . . . . . . . 3
2 The Conceptual Framework of IFRS, Accounting Policies and the
Presentation of Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3 IFRS 1 First-time Adoption of IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
II: Planning and Implementing a Transition Project . . . . . . . . . . . . 67
4 Establishing the IFRS Transition Project . . . . . . . . . . . . . . . . . . . . . . . . . . 69
5 Assessing the Accounting Impacts of IFRS Transition . . . . . . . . . . . . . . 105
6 Wider Transitional Issues – Systems, Internal Audit and the Audit
Committee, and Commercial Implications . . . . . . . . . . . . . . . . . . . . . . . 129
7 Training, Communication and Change Management . . . . . . . . . . . . . . . . 163
III: The Way Forward – Developments in Selected Countries . . . . 187
8 The Transition to New UK GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
9 The Way Forward – The Move Towards IFRS in the US and Selected
Other Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207
Appendix 1: IASB Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
Appendix 2: Useful Reference Material and Further Reading . . . . . . . . 225
Appendix 3: Summary of IFRS Transition Planning Considerations . . 229
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231
Index 237
LIST OF TABLES
Table 2.1 Chapters of the Framework 27
Table 2.2 XYZ Group: Statement of Financial Position as at 31 December 20X4 33
Table 2.3 XYZ Group: Statement of Proft or Loss and Other Comprehensive
Income for the Year Ended 31 December 20X4 37
Table 2.4 XYZ Group: Statement of Proft or Loss for the Year Ended 31 December
20X4 38
Table 2.5 XYZ Group: Statement of Proft or Loss and Other Comprehensive
Income for the Year Ended 31 December 20X4 38
Table 2.6 General Concepts of IAS 1 42
Table 3.1 Examples of Changes in Accounting Policies That May be Required on
Transition to IFRS 48
Table 3.2 Mandatory Exceptions and Optional Exemptions 52
Table 4.1 Top Tips for Planning an IFRS Transition Project 76
Table 4.2 Risks and Benefts of IFRS Transition 77
Table 4.3 Typical IFRS Reporting Options in a Group 84
Table 4.4 Specifc Planning Matters to be Considered 87
Table 4.5 Areas of Involvement of External Advisors 92
Table 4.6 An Illustration of the Costs of Transition for a Selection of Companies 97
Table 4.7 Typical Costs of Transition by Type of Cost 98
Table 4.8 An Overview IFRS Transition Action Plan for XYZ Co 100
Table 4.9 IFRS Transition Detailed Action Plan for XYZ Co 101
Table 5.1 Examples of Documentation to be Evaluated When Performing an
Accounting Impact Analysis 108
Table 5.2 Example High-level Accounting Impact Analysis 111
Table 5.3 An Example of a Specifc Accounting Impact Assessment on Non-current
Assets 112
Table 5.4 IFRSs Including Accounting Choices 124
Table 5.5 Current Status of IFRS Work Plan Focusing on Major IFRS
Active Projects 126
Table 6.1 An Example of the IT Consequences of Changes to the Accounting
Treatment of Non-current Assets 136
Table 6.2 Examples of Operational, Financial Reporting and Compliance Risks 139
Table 6.3 The Potential Business and Commercial Implications of the Transition 155
Table 7.1 Training Methods and their Advantages and Disadvantages 166
Table 7.2 Key Communication Messages 170
Table 7.3 Impact of IFRS Adoption on Ratios and Key Performance Indicators 173
Table 7.4 An Example of the Timing and Detail of IFRS Communications 182
Table 8.1 Accounting and Wider Impacts of Moving to FRS 102 198
Table 9.1 Main Differences Between IFRS and US GAAP 212