Not to be underestimated, or: silly me, I thought it was going to be easy

The biggest mistake people make in implementing IFRS, if you ask me, is to expect the worst. I’m telling you, it’s always easier than you expect. If it were me, I wouldn’t even start until a week or two before the deadline, and even then I’d take long lunch breaks. Oh wait, someone’s trying to get my attention…

September 2004 The impact of IFRS should not be underestimated, and those software companies affected will need to manage the communication of these changes with their shareholders and the market, as the first IFRS results could include a few surprises.

April 2008 The conversion is “far more complex and time consuming than it initially appears” and the “scope and complexity should not be underestimated,” said Rafik Greiss, a partner and the IFRS leader at Ernst & Young Canada. “This is much more than just a technical accounting exercise.”

August 2008 Systems may well need to be upgraded, for example to deal with the extensive fair value data required under IFRS, particularly in the area of financial instruments. If systems changes are to be made, these need to be specified very early on in the project, to allow time for development, testing and corrective action, and to ensure that the system is ready for operation when required. The time taken to achieve this should not be underestimated.

April 2009 This new skill set is crucial for adequate handling of the complex standards related to FRS 139 and the whole set of IFRS. The amount of knowledge necessary to handle such work should not be underestimated.

November 2010 The changes to historical lease accounting that would occur as a result of the new leases standard will require increased coordination between all functions of an entity. Given the significance of the judgments and estimates that will need to be made as well as changes in business practices, coordination between all levels of an organization should not be underestimated.

July 2013 “But I would say, given the SEC’s current stance, for domestic companies IFRS will be a non-event,” Osnoss said. Still, the IT and business changes necessary to comply with IFRS requirements are not to be underestimated, said KPMG’s Gabriel.

August 2013 There is a major change to accounting standards coming soon. The change should not be underestimated, could be a steep learning curve for accountants, and planning for it should start now.

July 2014 Ensure that the organization understands that the likely impact on IT systems is significant. IFRS 9 implementation should not be underestimated. Leveraging existing risk systems’ data alongside specific IFRS 9 models and adjustments can alleviate some of this impact.

January 2015 The new disclosure requirements should not be underestimated, as they provide for detailed and disaggregated disclosures on the various types of revenue and obtaining this information can be expensive. It is therefore crucial for companies to analyze the new requirements in conjunction with their contracts.

June 2016 According to estimates, IFRS 16 will bring about EUR 14 billion of leases to the balance sheet of Deutsche Telekom. The necessary adaptations – especially for companies with numerous leasing relationships – should not be underestimated. It is important to uniformly compile all leasing relationships – throughout all organizational units and international subsidiaries – in a database and to qualitatively prepare these data in accordance with IFRS 16.

September 2016 Nonetheless, the amount of work that will have to go into the adoption of each of the IFRS standards should not be underestimated. BDO Global’s IFRS experts view this triple whammy as perhaps the greatest change to real estate, property and construction accountancy in decades.

December 2016 The extent to which the new standards could affect issuer financial statements and related processes should not be underestimated. The new standards may warrant significant system changes and necessitate an issuer’s review of its existing contracts and arrangements (e.g., contracts with customers, financial instruments, and lease arrangements).

January 2018 But, while many companies across the globe seem to be on track, the task of changing to the new IFRS Standards should not be underestimated. Most companies need to change at least some of their systems and practices in order to comply. And it is important to realise that the implications, in most instances, extend far beyond the accounting function.

April 2018 The effort to implement IFRS 17 should not be underestimated, both in length and complexity. The adoption of IFRS 9 Financial Instruments needs to be factored into the implementation process.

Hmmm, I see now that I’ve really been missing something. I thought the thing to guard against was overestimating the difficulty of IFRS, but actually I should have been worried about underestimating it. You know, once someone points it out to you, it suddenly seems basically obvious. I don’t know where my head has been….

This has been another edition of our periodic series, “Great Cliches of IFRS” – the most recent installment was here. The opinions expressed are solely those of the author, leaving aside all other people’s opinions about how IFRS should not be underestimated, not that he hasn’t seen the light on that now.

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