Converting to IRFS: Save Cost, Time & Effort

Converting to IRFS: Save Cost, Time & Effort


International Financial Reporting Standards (IFRS) are the principles-based financial reporting requirements adhered to by more and more countries worldwide. Conversion to IFRS is well underway in many nations, including Canada, India, Japan and Mexico. These standards very likely are coming to the United States, as well.


Without question, a transition to IFRS is not just an accounting issue. It has far-reaching business consequences affecting not just external financial reporting, but also:

  • Business strategies and policies
  • Business processes
  • People and resources
  • Internal reporting
  • Methodologies
  • Financial reporting systems and underlying data

While switching to IFRS will be a bigger endeavor for some companies than for others depending on the nature, size and geographical spread of their activities, it will be a significant change event for most organizations. Therefore, now is the time for a company to begin formulating the steps it will need to take to ensure a conversion to IFRS is as seamless, effective and cost-efficient as possible.

Challenges and Opportunities

Countries and companies that have converted or are in the process of converting to IFRS have shared a wealth of experience about the process. Perhaps their most offered piece of advice is to start early and allow plenty of time. As these organizations learned, the most significant risks inherent in the IFRS conversion process include:

  • Ineffective project plan
  • Insufficient time to complete the project
  • Inaccurate diagnostic results, leading to an inadequate foundation for preparing a focused project plan
  • Limited or lack of audit committee and senior management involvement and support
  • Limited internal and external resources with IFRS accounting knowledge
  • Limited or no involvement from departments outside the accounting function
  • Underestimating the impact on people, process and technology
  •  Surprises, delays and significant rework because external auditors are not fully engaged in the project

Conversion to IFRS can take several forms: It can be “top down” or “bottom up” as it relates to the development of policies and procedures; it can address accounting policy with a “clean slate” approach – to change everything when viewing financial reporting through a new prism; or it can be an approach that changes only those items that require change. In terms of getting started, change management and proper project management protocols are critical. The effort required in an IFRS conversion will depend on multiple criteria, including:

  • Gaps between current accounting practices and targeted areas for complying with IFRS rules
  • The number of IT applications subject to change
  • The number of shared services
  • The level of homogenous and centralized practices between local reporting units
  • How deeply and pervasively identified gaps impact underlying business processes and accounting policies

Companies that converted to IFRS warn that checklists have their limits. The devil, they say, is in the details. For this reason, an exhaustive diagnostic should be completed to identify critical accounting differences and their impact throughout the entire organization.

The cost, effort and length of time required to convert to IFRS will depend on several important factors and vary for each organization. In evaluating these variables, companies should consider the following:

  • Does the organization have multiple reporting entities (and do any already use IFRS)?
  • Does the organization engage in complex or sophisticated financial transactions?
  • What internal and external resources are available to assist with the conversion?
  • Is the organization highly centralized or decentralized?
  • Does the organization use a common enterprise resource planning (ERP) system or multiple reporting systems? 
  • Does the organization’s ERP provider have IFRS upgrades or capable modules available?
  • How well has the organization handled other long-term projects, such as Sarbanes-Oxley Act (SOX) compliance?
  • What impact will IFRS have on SOX Section 404 compliance design and testing?
  • How familiar are the company’s external auditors with IFRS?

These considerations, as well as many others unique to your organization, will have a significant impact on the cost, effort and length of time needed to convert to IFRS. Historically, an IFRS conversion project averages two to three years. Companies with multiple ERP systems and highly decentralized operations may need even more time. Based on this, the message is clear: Start early and allow sufficient time.


How We Help Companies Succeed

Conversion to IFRS raises numerous issues for companies. Protiviti can help you assess the impact of the transition to IFRS by using diagnostics and other tools to identify and prioritize infrastructure issues that require attention. We can assist with policy and procedure development or modification, accounting and reporting process redesign, IT/ERP system controls updates or improvements, and IFRSrelated project management, among other areas, and help you transform people, process and technology.
In our work assisting clients worldwide with their internal controls, we have developed solutions that help CAEs, CFOs, CIOs and chief legal officers to manage change. Our approach is based on the early establishment of a sound foundation with tone-at-the-top support and rigorous project management.


Protiviti was retained by a large multinational financial services company to provide IFRS technical support. Our responsibilities included preparing a summary of all relevant IFRS guidance for local offices and finance staff, and training personnel worldwide on IFRS technical guidance and the link between IFRS guidance and the organization’s internal controls. Topics included financial instruments, hedge accounting, credit risk and FSCP topics such as provisions, tax and consolidation, and the impact of new exposure drafts. Based on the success of our work, the company retained Protiviti to monitor IFRS developments and assess the impact for reporting and required controls.


Christopher Wright
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Steve Hobbs
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James Aerni
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Russ Collins
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Nancy Pechloff
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Danny Rudloff
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Duane Hedlund
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Charles Soranno
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