The most significant part of planning the transition to IFRS involves identifying the accounting impacts, developing new appropriate accounting policies, and implementing any necessary system changes. This is where the project team will need to use technical knowledge of IFRS and, depending on the complexity of the accounting issues involved, there may be a need to rely on experts and bring in help from outside the organisation. The use of the exemptions allowed under IFRS 1 First-time Adoption of IFRS will also need to be addressed, as will the need to capture additional information for disclosure in the notes to the financial statements.
This chapter discusses the matters to be considered in performing an accounting impact assessment of the move to IFRS, looking firstly at how the accounting impact assessment should be performed, and then going on to explore how the new IFRS-compliant accounting policies should be developed, including consideration of costs and benefits of new policies, the potential for volatility in financial reporting, tax implications, and presentation choices.
5.1 CONDUCTING AN INITIAL IMPACT ASSESSMENT
5.1.1 The Basics of Impact Assessment
Assessing the accounting and disclosure requirements of converting to IFRS is a crucial part of the transition project. Experts in IFRS transition strongly advocate that sufficient time and effort is used in the impact assessment. If the assessment is rushed ...