Managing expectations around IFRS transition

Investor View ()

The overriding message coming from interviews with investors and analysts is that management should warn the capital markets of any material changes likely to impact their reported results or financial position.

Signal in advance. Start communication expected changes to numbers up to a year in advance of adoption of IFRS. This allows investors and analysts time to get up to speed on the impact of new accounting standards. It can also act as a positive signal to investors about the quality of the entity‟s internal processes, indicating that management has the flexibility to adapt to a changing environment.

Lost in a sea of detail. There was some frustration expressed by those who had been presented with a long list of changes, with little to help guide them to the most material issues. It was therefore suggested that, in communicating future changes to reported numbers, management should consider presenting a list of the line items that are likely to see the biggest impact, with an explanation of the expected effect.

Old and new. Given the critical importance of high-quality trend data, those who have been through the transition to IFRS praised the efforts of management that provided a reconciliation between the old GAAP and the new (for two years or more), with notes explaining the biggest changes.