No easy task
By Rafal Kuczynski
The article, “No easy task” by Rafal Kuczynski mentions the changeover to International Financial Reporting Standards as a major challenge. It is also viewed as an opportunity for audit firms to review their procedures. The article informs us of the changeover and suggests gaining proper knowledge of the new standards to ensure an effective transition. As the title illustrates, it is not going to be an easy task to fully implement and use the new standards in daily practice.
Companies can learn a lesson from the European experience mentioned in the article and take the changeover as a serious task. The European experience clearly shows the process of adapting and reconfiguring information systems and updating internal controls as a critical factor in the changeover. Managers need to absorb the technical impact of standards but will also need to capture relevant data ...view middle of the document...
Therefore, planning is a very important step to focus on. The planning stage is the most important for this transition to be effective and avoid any errors. It should be focused on assessing and updating professionals’ knowledge and participating in the conversion process. The article mentions the failures and errors due to lack of proper knowledge and not being fully prepared for the transition. Training should be provided to cover technical, theoretical and practical issues. Auditors should also identify files with the greatest risk to take necessary precautions to ensure the audit is properly performed.
Unlike Canadian GAAP, where certain complex accounting treatments are closely modelled on US rules, IFRS is based on much looser and general principles, which needs more interpretation and judgement. For some cases, there is no IFRS equivalent to the current Canadian standards. That is why stakeholders are concerned about the impact of changes and the risk that standards will be applied inconsistently. Therefore, this issue and its impact on audit engagements will need to be addressed. Auditors should also consider the possibility of fraud by management as they can take advantage of the changeover to enhance the results or financial position in the opening balance of the financial statements.
IFRS should be an area of focus for most companies. Companies should be thoughtful and measured in their approach as they consider this complex challenge. Changing over to IFRS is a global business project which aims to encourage compatibility between multinationals, so that investors and users can assess performance on a like for like basis.
The article informs us of the changes and how to prepare for the transition. We as students should be aware of these changeovers as one day we will be applying these standards in our work. As new rules will become in effect or there will be changeovers in standards, students need to be aware of how important it is to be up to date with the knowledge and training. In order for the changes to be effective, auditors will need to adapt the new revisions into their daily practice.