Managing the Transition to IFRS-Based Financial Reporting: A Practical Guide to Planning and Implementing a Transition to IFRS or National GAAP

6 WIDER TRANSITIONAL ISSUES – SYSTEMS, INTERNAL AUDIT AND THE AUDIT COMMITTEE, AND COMMERCIAL IMPLICATIONS

Assessing the accounting impacts and developing IFRS-compliant accounting policies involves technical knowledge and accounting skills, and that part of the transition project will be performed by those in the accounting function often with the help of external IFRS accounting specialists. It would be dangerous, however, to consider accounting issues in isolation, as the choices made can have significant wider impacts. The objective of this chapter is to examine those wider impacts, starting with impacts closely aligned to the accounting issues, namely impacts to do with systems, controls and internal audit. Some of these consequences may come as a surprise, and careful thought will need to be given to accounting policy choices to ensure that all significant impacts have been identified and evaluated. There may be real strategic and commercial effects of the transition, some advantageous and some not, and a wise selection of accounting policies should minimise the negative consequences at the same time as maximising any positive opportunities that the transition brings.

This chapter also considers the role of internal audit and of the audit committee. Both have important roles to play in helping to ensure that IFRS reporting becomes embedded in the organisation, and that assurance is obtained over the integrity of the IFRS reporting systems. The audit committee is well ...