Moving from GAAP to IFRS So many changes and so much to learn – A curse or an opportunity?
There is an ancient Chinese curse that goes something like this, â€œMay you live in interesting times!â€ Well, these are definitely interesting times for accountants. Depending on your point of view, the numerous changes in the Canadian accounting landscape are either a curse or an opportunity.
In Canada, Publicly Accountable Enterprises are changing from GAAP to IFRS and Private Enterprises are going to have to choose between adopting IFRS or the new Private Enterprise GAAP.
Whether you are in public or private practice, like it or not, this means that you will have to acquire new skills or retire from the profession. So letâ€™s review the skills accountants will be expected to master.
Bookkeeping and recording skills
Keeping track of payments and disbursements and recording the debits and credits in ledger accounts will still be necessary, but will fade in importance compared to the other necessary skills.
Accountants will be expected to continue preparing reports that summarize an entityâ€™s financial transactions. However, these reports are changing and you will be expected to acquire the knowledge to prepare reports that meet the new standards.
This is a softer skill that many accountants are not adept at. From now on you will have to sell or cajole the Business and Operational people into providing the increased, ongoing data and information that you will need to prepare financial statements. This is a real source of irritation for many accountants who are not accustomed to playing this role.
Communication and presentation skills
Accountants need to upgrade their presentation skills so that they can effectively explain the new financial statements and the requirements of the new standards to management, the audit committee, and to investors. You will have to win over your audience by communicating in a manner that they can understand.
An increasingly important part of communication for accountants will involve writing skills. Accountants will have to become skilled authors when it comes to drafting the Notes to the financial statements, or preparing the Management Discussion and Analysis. The disclosure requirements have expanded, and become more demanding due to the requirement that they be easy for anyone (not just accountants) to understand. From now on financial statements must contain additional supporting documentation.
Writing modified or new company accounting policies to meet the new standards is another area where accountants will also be asked to contribute. Your input will be a necessary part of aligning accounting policy, operations, and sales strategies.
Accountants will be asked for their advice by management when it comes to revenue recognition policies and asset valuation. You will have to explain the consequences of the choices the company must make and how these choices will influence the decisions of investors and lenders.
It is true that developing all these new skills quickly combined with the pressure of getting up to speed on all the new accounting rules is causing stress for accountants; however, those who embrace the change cannot help but turn a curse into an exciting opportunity.
Mike Morley is a Certified Public Accountant, consultant, speaker and author of several books including IFRS Simplified, Sarbanes-Oxley Simplified, Financial Statement Analysis Simplified, and Credit for Canadians If you would like to learn more about IFRS and what these new standards will mean for companies, go to www.mikemorley.com or call Mike at 657-558-6832 or email firstname.lastname@example.org