Embedding IFRS

Making IFRS sustainable doesn’t always require a large, costly and lengthy project. In a pressurised, numbers-focused environment, there is often very little opportunity to reflect on the bigger picture and practical improvements that could be made. Taking the time to do this helps to establish where energy can be focused in future, in order to improve the effectiveness of the finance operation.

The calmer period, after year end and before half year reporting begins, is the ideal time to take stock and make improvements.

Embedding is about taking those tactical approaches that were designed to meet the immediate IFRS reporting deadlines and transforming them into more sustainable, efficient and effective procedures. This means moving IFRS reporting from being a costly chore to being business as usual.

Successful conversions are often thwarted by obstacles that may be relatively simple to solve, but difficult to identify. Through our experience, we have identified common problem areas that companies face after conversion, and our specialists can assist companies in finding ways of overcoming those difficulties. Here we outline some typical problems and the quick wins that companies should consider in overcoming them.

Common problems

• Insufficient time to take stock of the overall progress to making IFRS part of business as usual
• Management frustration at results that don’t line up with company performance
• The team spending a disproportionate amount of time trying to address questions, as well as resolve errors and frantically meet the next reporting timeframe
• Gaps in cohesiveness caused by staff turnover
• Dependency on a small number of key people after project staff and budget is released
• Processes are weak, not well communicated or out of date.

Clearly, these issues may have existed before IFRS, but are frequently exacerbated by the additional strain of the new reporting regime. An assessment against key embedding indicators discussed with your team will identify those areas that can be improved.

Practical solutions

Some common solutions that we have seen work in response to these issues include:

• Conduct a review to determine if the individual pieces of your IFRS implementation fit together in the wider context. There may be simple pieces missing in your strategy that are needed to join up individual activities
• To avoid exposure to a small number of key people, document key policies and put in place a wider training programme
• Use analytical tools as part of the data review process to reduce the number of errors identified late in the process and to arm the implementation team with answers to senior management’s questions
• Prioritise how you will address the solutions arising from your review to focus its energy in the most productive direction.

IFRS embedding review

Embedding is about ensuring that IFRS becomes a 'business as usual' activity, rather than an annual reporting concern. It also means reducing risk in your business as sustainable processes supersede the tactical approach.

Our experienced specialists have a tried and tested approach to assessing companies' progress against a range of indicators of embedding. An IFRS embedding review - consisting of a series of structured interviews - will enable you to identify, plan and prioritise the steps necessary to move towards sustainable and flexible reporting.

This review will enable you to meet the ongoing challenge of IFRS with confidence - both now and in the future - to reduce costs, minimise errors and mitigate risks.