Cost and Training Seen as Biggest Barriers to Change
MENLO PARK, Calif., Oct. 20 /CNW/ -- Many U.S. companies have not begun
preparations for the possible transition from the current Generally Accepted
Accounting Principles (U.S. GAAP) to International Financial Reporting
Standards (IFRS), according to a survey conducted by Protiviti Inc., a global
business consulting and internal audit firm. The survey also finds a number of
challenges for companies in making the conversion to IFRS, including the
expense of upgrading IT systems to finding the right talent to make the
transition smooth and efficient.
Throughout the world, regulatory agencies and investors have sought out a
consistent worldwide standard for financial reporting, resulting in the U.S.
Securities and Exchange Commission (SEC) publishing a proposed roadmap for
large corporations to switch to international accounting standards by 2014.
Under this proposed plan, more than 100 companies may be able to start
following IFRS with their 2009 financial statements.
"Now is the time for companies to begin determining the steps they will
need to take to ensure that their conversion to IFRS is as seamless and
cost-effective as possible," said Christopher Wright, managing director with
Protiviti and one of the firm's global leaders of IFRS services. "Conducting a
diagnostic review of everything from financial policies and disclosures to
data flows is strongly recommended now to scope out all the possible ways a
company and its finance function could be impacted."
Key findings from Protiviti's IFRS survey include:
-- 48 percent of the respondents reported their organizations have made
no preparations to date to adopt IFRS
-- More than 40 percent said that if the SEC allows a choice between
using U.S. GAAP and IFRS, their organizations would choose to switch to IFRS
-- Most companies don't have a Project Management Office (PMO) presently
assigned to lead the transition
-- More than 60 percent of respondents said they anticipate at least a
moderate cost impact in transitioning to IFRS.
Survey respondents included CFOs, who made up almost half of survey
participants, along with CEOs, chief audit executives (CAEs), vice presidents,
controllers, and directors of finance and financial reporting. These
participants also were asked to cite the greatest barrier to the transition to
-- CFO responses included cost, educating financial statement readers,
learning new standards and setting up initial reporting formats.
-- CAEs saw introducing cultural change and implementing information
technology change management processes as barriers. This group also noted the
need to understand the differences between U.S. GAAP and IFRS and to educate
the company on those differences.
-- Internal audit managers believed coordination with international
operating units and updates to financial systems would be difficult in the
"If approved by the SEC, the IFRS transition could have far-reaching
ramifications for U.S. companies including policy development, technology
migration, operational processes and procedures, staff education and training
and other change management efforts," Wright said. "Companies who plan for the
possible IFRS convergence or conversion will have a competitive advantage over
those that wait."
Protiviti conducted its IFRS survey at the 2008 Financial Executives
International (FEI) Summit primarily, with additional responses gathered
online from Protiviti KnowledgeLeader subscribers
(http://www.knowledgeleader.com). A total of 75 executives participated in the
study, nearly half of whom are CFOs. To obtain a complimentary copy of the
survey report, please visit http://www.protiviti.com/go/ifrssurvey or call
Protiviti (http://www.protiviti.com) is a global business consulting and
internal audit firm composed of experts specializing in risk, advisory and
transaction services. The firm helps solve problems in finance and
transactions, operations, technology, litigation, governance, risk, and
compliance. Protiviti's highly trained, results-oriented professionals provide
a unique perspective on a wide range of critical business issues for clients
in the Americas, Asia-Pacific, Europe and the Middle East.
Protiviti has more than 60 locations worldwide and is a wholly owned
subsidiary of Robert Half International Inc. (NYSE: RHI). Founded in 1948,
Robert Half International is a member of the S&P 500 index.
Protiviti is not licensed or registered as a public accounting firm and
does not issue opinions on financial statements or offer attestation services.
For further information:
For further information: Kathy Keller of Protiviti Inc.,