Is Adopting IFRS Accounting Standards Right for Your Company?
Global accounting standards help lessen the complexity and risk when preparing financial statements dealing with cross-border activities. International Financial Reporting Standards (IFRS) bring transparency by allowing international comparability and quality of financial information, enabling investors and other participants to make informed business decisions and identify opportunities and risks. Given any of the following scenarios, you might consider reporting under IFRS.
- Are you a U.S.-based company considering increasing your global customer base, production capacities?
- Are you looking to attract international investments such as international Private Equity Funds or Non-U.S. based Institutional Investors?
- Are you currently contemplating an acquisition and need to understand how IFRS financial statements compare to U.S. Generally Accepted Accounting Principles (“GAAP”) statements?
- Or are you looking to access to capital markets outside the U.S.?
If you answered yes to any of these questions, you may find it beneficial or even necessary to report under IFRS or at least understand the differences between IFRS and U.S. GAAP. Whether your company, or one or more of its subsidiaries, is already using IFRS as a local GAAP requirement or contemplating the adoption of IFRS for other reasons, Cherry Bekaert is uniquely qualified to be your trusted advisor with our team of seasoned technical professionals with decades of experience serving clients with IFRS related needs and requirements or being CFOs or Controllers before.
We apply a truly hands-on, risk-based approach while interacting with management and other stakeholders to develop a tailored project scope. Strong partner, managing director, and director day-to-day involvement is key of our service philosophy as we believe this ensures effectiveness and quality.
IFRS are the known financial standards in many countries outside the United States and having actual or pro-forma IFRS financial statements can be an advantage in competing for international investments or securing other traditional funding outside the United States. While there have been multiple U.S. GAAP and IFRS convergence projects in the past, major difference remain and make a thorough impact assessment for a GAAP conversion necessary.
We serve many clients using IFRS accounting methods and have guided them through a smooth and successful adoption of those standards. Through our association with Allinial Global, Cherry Bekaert truly offers a worldwide support network with local resources as needed.
We provide not only GAAP Conversion Services (For example, “Heat Map Assessment”) highlighting material GAAP differences, but we also support with Technical Accounting Advisory, and Accounting Transformation, and Accounting Projects & Solutions such as Post Transaction Integration with includes Purchase Price Allocation, Opening Balance Sheet support, etc. We frequently collaborate with our Risk Advisory group to identify and develop internal controls while executing a GAAP conversion project.
In addition, we provide Audit and Compliance services for clients who prepare IFRS financial statements.
IFRS reporting can help you achieve your highest standards
The need to change from U.S. GAAP to IFRS accounting methods will be a challenge for any organization and will impact the financial organization, related procedures, processes, and internal controls. While IFRS adoption within an existing accounting system is daunting, it can also create opportunities to streamline major business functions and accelerate your finance transformation journey. You may benefit from:
- Principle-based standards vs. rules based as often found within GAAP
- Consistent reporting with a foreign parent, major customer or supplier
- Greater access to global markets
- Attracting international investments
- Accessing capital markets outside the United States
- Kickstarting your finance transformation journey and related ROI
Before making any change in accounting standards, you must also consider:
- Costs to be incurred through legal, software and transition fees
- Training and hiring internal talent
- Tax implications such as changing inventory valuations
- Bank loan covenants
Learn more about our IFRS Accounting Standards and how we can help you manage your financial statements.
