4 Current and Recent IFRS Implementations You Should Be Aware Of
For most, summer is the time of year when things slow down a bit, and holidays at the beach and picnics in the park take priority.
However, this summer has been a little busier for accounting and finance teams. There are calls for regulatory change in the audit profession. Political uncertainty is working its way into accounting estimates. Plus, organisations are in the middle of the highest number of IFRS implementations in 10 years.
See which current and recent IFRS implementations are at the forefront of the dialogue of the statutory controller and entity accounting community.
Current and recent IFRS implementations
IFRS 15: Revenue from contracts from customers
IFRS 15 is disclosure-heavy, with 38% of practitioners indicating significant additional disclosures and disclosure management. With average project implementations taking 9 to 12 months amongst global multinationals, the expert consensus is don't leave it to the last minute. Ensure adequate time to plan your team's project and execute transformation.
This IFRS update, in particular, requires close collaboration between different teams, such as business finance, statutory controllership, audit committee and external auditors. IFRS 15 increases the demand for the documentation of audit trails, working papers and estimation of judgments.
IFRS 16: Accounting for leases
The main impact of IFRS 16 amongst preparers of statutory financial statements is the increase in judgments and disclosure of judgment audit trails. This includes the impact on intergroup lease accounting.
The standard requires consideration of the implications for consolidations within entity accounting frameworks and increased eliminations model updates for impairments on the right of use asset. Transition projects need to be implemented in 2019.
IFRS 17: Insurance contracts
IFRS 17 continues to generate debate within the profession. IFRS 17, which aims to introduce a single global standard for insurance companies, has had its implementation date moved to 2022.
Implementation is made more complicated by the need to include actuarial KPIs, actuarial calculations and reporting elements from already complex data models into the statutory financials. Not least of which, this standard is as much about process transformation and data management as it is about the published financial statements.
Add consideration of IFRS 9 into the mix, and the financial component of the insurance model and the complexity of the moving parts becomes evident.
IFRS 9: Financial instruments
IFRS 9 has been timely in its introduction. US-China tariffs, the UK and French tax on digital profits and Brexit have all caused political volatility. This volatility has had a real impact on expected credit losses and the assessment and documentation of accounting estimates.
This is driving increased scrutiny of retention of working papers and how management estimates have been built up and documented. Additionally, it is necessitating closer examination of the requirement from external auditors to walk from statutory disclosures through the audit trail, where you can demonstrate the management review and assumptions underlying the accounting estimates.
Connected reporting for IFRS implementations
More organisations are turning to connected reporting platforms to shorten their record to report (R2R) cycles and streamline both IFRS implementations and the statutory reporting cycles. The end result of using a connected reporting platform is secure, accessible and reusable data that can be leveraged across multiple reporting streams.
Reach out if you would like to learn more about how Workiva can help your team, your organisation and your IFRS implementation work together.
About the Author
Conor has over 20 years of experience as a senior finance executive for multinational corporations. He is a fellow of the Institute of Chartered Accountants in Ireland (FCA). He was also a Member of Council at the Institute of Chartered Accountants in Ireland from 2002–2005.