With mandatory IFRS transition likely to begin in 2014, companies need to look at how management will communicate with investors post-transition; how some companies may need to change their business practices with customers and vendors; and how the change to IFRS will affect compensation. Here, PwC offers in-depth overview of the issues.
Switching to IFRS will be a bigger change for some companies than for others.With mandatory transition beginning in 2014 (and voluntary adoption permitted for some companies as early as 2009), it makes sense for management to start sizing up the volume and variety of financial, business, tax, and operational changes—the objective being to avoid a resource-intensive effort at the eleventh hour. Perhaps just as important, sufficient lead time will allow companies to see where the transition to IFRS can deliver substantial benefits, as some Fortune 50 companies are already doing.
Transitioning to IFRS is likely to impact how management communicates with investors, as well as how some companies conduct business with customers and vendors.
The new financial reporting regime will affect internal operations and may cause companies to change the form in which some employees are compensated.
The transition requires sophisticated planning due to the many interrelated changes it will entail within an organization. Company-specific modifications are needed—a cookie-cutter approach won’t work.
The earlier a company plans strategically for this transition, the better.