Moving to IFRS: what the transition really involves

Companies move to International Financial Reporting Standards for different reasons: a lender or investor asks for it, a parent company needs consolidated figures, or the company is preparing for growth. Whatever the reason, the transition is a project with its own plan, owners and timetable.

Start with the differences

The first step is a structured comparison between your current accounting policies and IFRS requirements. Typical areas of difference include revenue recognition, leases, financial instruments, impairment of assets and the presentation of the statements themselves.

Decide on accounting policies

IFRS often allows choices. Each choice affects future reporting, so policies should be selected deliberately, documented and approved by management.

Prepare the opening balance sheet

The transition requires an opening statement of financial position under IFRS. This is usually the most demanding step, because it may require historical data that was never collected for national reporting.

Build a repeatable process

A one-time conversion is expensive to repeat. A mapping between the national chart of accounts and IFRS, with documented adjustments, makes every following period faster and more reliable.

Involve the auditor early

If the IFRS statements will be audited, discuss significant judgements with the auditor before the statements are finalised. Early alignment avoids late adjustments.

Questions to ask before you begin

• Who will use the IFRS statements, and for what decisions?
• Which reporting date and comparative periods are required?
• Does the accounting system hold the data IFRS requires?
• Who in the finance team will own the process after the first year?

This article provides general guidance and does not constitute professional advice for a specific situation.