The phrase “IFRS convergence” has been loosely used in Indonesia to describe the process of aligning the Indonesian Financial Accounting Standards (IFAS) to the International Financial Accounting Standards (IFRS). It is also generally used to refer to conversion of IFAS-based financial statements to IFRS-compliant financial statements in circumstances such as when:
Subsidiary companies in Indonesia that have parent companies which are or in the process of becoming IFRS compliant may be required by their Head Office to prepare IFRS compliant financials in addition to their statutory financial statements.
Potential international investors that are looking to acquire businesses in Indonesia may want to understand how the financials of the target companies look like under IFRS as those investors are probably more familiar with IFRS (also check Accounting advice and support relating to events/transactions for more details)
Indonesian companies that are listed in International stock exchanges may be required to file their financial statements prepared in accordance with IFRS.
What challenges will you face?
Becoming IFRS compliant, you will be confronted with a number of questions and problems, which will need to be resolved. These may include:
How do you overcome the challenges of understanding IFRS or preparing IFAS?
How do you ensure adequate resources to prepare for convergence to IFRS or changes to IFAS?
How will you achieve the targeted date for reporting under IFRS or revised IFAS?
How will the IFRS convergence affect your accounting financial system?
How will the IFRS convergence affect other aspects of your organisation management, e.g. budgeting, performance measurement, compliance with covenants on financial ratios, etc.?
How do you explain the differences of financials prepared under IFRS and IFAS to the stakeholders, especially when there are significant differences that affect the key performance items, such as revenues, earnings, financial ratios, etc.?
How can we help?
By gathering the insight of people who have already experienced IFRS reporting, a company can better focus its efforts. Our IFRS specialists can help you in the following phases of your IFRS convergence:
Conducting diagnostic reviews to determine your company’s readiness for IFRS convergence, including identifying key issues and recommendations/resolutions
Customising your IFRS convergence strategy
Assessing your accounting information system/building blocks (including for example: accounting manual, chart of accounts, standard operating procedures, etc.) and other affected organisation functions
Conducting IFRS convergence awareness workshops
Developing accounting tools (including electronic instruments) to help you map all the differences arising from the IFRS convergence, which will be considered in preparing the financial statements under IFRS or revised IFAS
Advising on the design and implementation of the accounting information system/building blocks to align to the requirements under IFRS or revised IFAS (including data collection, IFRS or revised IFAS adjustments, disclosure formats, etc.)
Assisting preparation of financial statements under the IFRS or revised IFAS
Providing training in IFRS or revised IFAS (also check Training in financial reporting for more details)
Consultations on the application of new/revised IFRS/IFAS
Advise and assist in the development of guidance to implement new/revised accounting standards
Recommendations on complex IFRS issues
Provide training on IFRS for newly issued/revised standards (also check Training in financial reporting for more details)