¬¬¬¬¬ Lijing Lu
Professor Kupta
ACCT 865
October 14th, 2014
IFRS Impact on AIS
As more companies are going global, the need for an internationally comparable and understandable financial reporting system increased exponentially. IFRS becomes the most acceptable financial reporting standards worldwide. The trend of converging with IFRS has been driven by the demand of global investors, because a single set of financial reporting system will facilitate their decision-making process in the global context. In 2002, all European companies were required to convert to IFRS within 2 years. Now almost all the major economies in the world are either accepting IFRS or considering adopting IFRS in the future, including the U.S. Multinational corporations …show more content…
A company should particularly take its Accounting Information System seriously, since IT will consume a major part of time and cost. According to KPMG report in 2008, “Worldwide, companies have spent considerable time, money, and other resources to convert to IFRS—and many of them report that a substantial component of their conversion costs were IT related” (KPMG). That’s why it is important that a company should plan ahead of time and evaluate the potential influence on IT function before implementing the new system. It will save the company tremendous time and costs. On Deloitte report of CFO Insights: are your ERP system ready?, it specifically mentions that no matter which choice a company picks, it should be prepared ahead of time to adapt to the new system or the changes, because of the “lead time” from initiation to execution …show more content…
According to “Deloitte Implication of IFRS adoption for US Companies”, to consider the impacts on the IT system, there are five dimensions a company will take into considerations: including upstream system, general ledger, reporting data warehouses, downstream and infrastructure (Delloitte).
Information Technology Infrastructure Hardware might need upgrading if necessary. In any case, the hardware will have to be compatible with the software. For example if a company choose to have both GAAP and IFRS at the same time, it will need a larger server to run different software and larger database.
Internal controls In the report of KPMG, it mentions that the internal control needs to be strengthening to comply with Sarbanes- Oxley Act and IFRS conversion (KPMG). Moreover, the actions taken for conversion into IFRS may have “significant proportion of the internal control over financial reporting, a situation that in turn may affect the organization’s ability to comply with local corporate governance legislation”
Professor Kupta
ACCT 865
October 14th, 2014
IFRS Impact on AIS
As more companies are going global, the need for an internationally comparable and understandable financial reporting system increased exponentially. IFRS becomes the most acceptable financial reporting standards worldwide. The trend of converging with IFRS has been driven by the demand of global investors, because a single set of financial reporting system will facilitate their decision-making process in the global context. In 2002, all European companies were required to convert to IFRS within 2 years. Now almost all the major economies in the world are either accepting IFRS or considering adopting IFRS in the future, including the U.S. Multinational corporations …show more content…
A company should particularly take its Accounting Information System seriously, since IT will consume a major part of time and cost. According to KPMG report in 2008, “Worldwide, companies have spent considerable time, money, and other resources to convert to IFRS—and many of them report that a substantial component of their conversion costs were IT related” (KPMG). That’s why it is important that a company should plan ahead of time and evaluate the potential influence on IT function before implementing the new system. It will save the company tremendous time and costs. On Deloitte report of CFO Insights: are your ERP system ready?, it specifically mentions that no matter which choice a company picks, it should be prepared ahead of time to adapt to the new system or the changes, because of the “lead time” from initiation to execution …show more content…
According to “Deloitte Implication of IFRS adoption for US Companies”, to consider the impacts on the IT system, there are five dimensions a company will take into considerations: including upstream system, general ledger, reporting data warehouses, downstream and infrastructure (Delloitte).
Information Technology Infrastructure Hardware might need upgrading if necessary. In any case, the hardware will have to be compatible with the software. For example if a company choose to have both GAAP and IFRS at the same time, it will need a larger server to run different software and larger database.
Internal controls In the report of KPMG, it mentions that the internal control needs to be strengthening to comply with Sarbanes- Oxley Act and IFRS conversion (KPMG). Moreover, the actions taken for conversion into IFRS may have “significant proportion of the internal control over financial reporting, a situation that in turn may affect the organization’s ability to comply with local corporate governance legislation”