The goal of Phase 1 of the 5 Phase IFRS Project model is to identify changes, differences, and business consequences of the IFRS conversion…including accounting and reporting differences, potential areas of business affected by these differences identified, and types of processes and system effects and issues resulting from the differences in conversion. The diagnostic identifies areas of focus in future phases of the project.
It is important in this phase to scope the work appropriately within the Business units to include; key conversion champions, and potential areas for review such as Accounting, Tax, Business processes and systems and IT, Change management training and communication program. It is also very important to create awareness throughout the organization emphasizing that IFRS is not just an Accounting exercise.
The diagnostics also identifies key accounting differences and assesses the consequences on business and systems and should also identify and assess the interaction between IFRS conversion and other current and planned initiatives. Once completed, the diagnostic enables development of Key milestones to be established.
Diagnostic Phase 1 outcomes:
As a result of the diagnostic phase of the 5 phase IFRS project model, the company should expect significant outcomes:
• High level determination of financial reporting differences between Canadian GAAP and IFRS.
• Identification of expected main business impacts expected from IFRS conversion.
• High level assessment of likely impacts on IT systems and modifications necessary to facilitate appropriate data collection to satisfy all IFRS Disclosure requirements.
• Identification of any major change management issues.
• Identification of hurdles to conversion presented by existing financial reporting structure.
• Identification of industry-specific issues.
• Awareness of IFRS issues within Finance community and give momentum to conversion project.
• Provide base information to facilitate IFRS conversion.
• Recommendation on structure and approach.
I hope this helps. This is one of a series of blogs that is meant to convey information relating to Canada’s transition from Canadian GAAP to IFRS.
For further information, please refer to the ongoing series of IFRS blogs on the Edelkoort Smethurst Schein CPA’s LLP web-site and please remember to contact your accounting professional for further guidance.