IFRS conversion may prove costly for IT teams

Switching to International Financial Reporting Standards (IFRS) may include a steep price tag for many companies’ IT departments, according to a new report from Ernst & Young.

The report, “Inside IFRS: The Opportunity for IT,” uses examples from many other countries that have undergone the conversion and the experiences faced by their IT departments.

“While accounting considerations are the primary drivers of IFRS conversion, information technology (IT) departments must participate in project planning to provide insight around the technical implications of key decisions,” the report read. “Some companies may face significant information system implications, while others may find that systems do not require major rework. But there is simply no way to know the extent of effort required unless the IT organization devotes attention to this question. Consequently, the company that does not devote the effort now to analyze their organization’s specific conversion requirements for time, people, process and systems could be caught unprepared and have fewer options than those companies that planned ahead.”

In a survey by the Institute of Chartered Accountants in England and Wales, 75% reported increased complexity around information technology issues.

The report brings companies face-to-face with news they may not want to hear, but need to understand as the possibility of a convergence with IFRS becomes almost inevitable. “Companies may need two to three years to implement changes to IT systems in order to capture the necessary data prescribed by IFRS standards.”

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