Why is it important that companies complete a pre-convergence assessment when preparing to move to IFRS?
Most large transformation initiatives or significant strategies that a company undertakes frequently are underestimated by the board and management in terms of the impact on the culture, the capabilities of its workforce, and wear and tear on an organization. They often lowball the necessary effort, cost and level of resources and skill sets. We know that the key to execution is proper planning. Relevant topics important to cover in this assessment include: • Impact on key reporting areas. Revenue is one of the key financial statement accounts used by analysts and investors to measure a company’s financial performance. Revenue recognition, as currently promulgated, has significant differences under GAAP and IFRS. Given its complexity, trying to gain an understanding now, as opposed to later, of the impact the transition to IFRS would have on the revenue recognition policy will contribute towards effective planning and managing expectations. • Changes in reporting methodologies, systems
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