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TABLE OF CONTENTS WHAT IS IFRS?
What is IFRS? 1 IFRS - International Financial Reporting Standards are a series of
accounting standards developed by the International Accounting
SEC Timeline for Adoption 2 Standards Board (IASB), that is becoming the global standard for the
preparation of public company financial statements.
What are the New Standards? 3-5
IFRS focuses on the standardization of financial reporting standards
IFRS and GAAP 6
across international borders. This standardized reporting practice
provides a uniform view of a corporations accounting statements.
US GAAP -vs- IFRS Similarities 7
Complete adoption
2018
WHAT ARE THE NEW STANDARDS? WHAT ARE THE NEW STANDARDS?
IFRS Consolidation Standards Detailed Transaction Standards
The next set of standards focuses on professional-level accounting The last set of standards often require detailed transaction data to
and consolidation practices where corporations handle specific be summarized and reported correctly, which means capturing this
situations; for example - merger and acquisition activity, foreign data in the subsystems. Oracle’s ERP solutions will provide specialized
currency translations, etc. and/or specific high-level transactions (e.g., industry products and subledger solutions for service consumers.
government grants, discontinued businesses, etc.). Organizations can Specific compliance and features are constructed with the IFRS
chose to use Oracle’s EPM solutions to facilitate modeling corporate Statement in mind.
adjustments before pushing them down to the ERP General Ledger.
Standard Area Covered Products
Also, all of Oracle’s ERP solutions contain many powerful general
accounting features in each of its General Ledgers. IAS 41 Agriculture Specialized industry
IAS 32 FI: Presentation products and
Standard Area Covered Products IAS 39 FI: Recognition, Measurement subledger solutions
IAS 10 Post Balance Sheet Hyperion Financial IFRS 07 Financial Instruments for service consumers
IAS 20 Government Grants Management, IFRS 04 Insurance Contracts
IAS 21 Foreign Currency Oracle General Specific compliance and features constructed with the IFRS statement.
IAS 29 Hyperinflation Ledger
IAS 36 Impairment Standard Area Covered Products
IAS 37 Provisions & Contingencies IAS 02 Inventories Specialized subledger
IAS 38 Intangibles IAS 11 Construction Projects solutions: Projects, Fixed
IAS 40 Investment Property IAS 16 PP&E Assets, CRM, Order
IFRS 01 First Time Adoption IAS 17 Leases Management and revenue
IFRS 05 Discontinued, Held for Sales IAS 18 Revenue recognition in AR,
IFRS 06 Mineral Resources IAS 19 Employee Benefits Procurement and AP,
IFRS 08 Operating Segments IAS 23 Borrowing Costs Inventory and Costing
Features include: Tracks data required by the specific statement, such as revenue
Flexfields, segments and other chart of accounts features, translation recognition in receivable, costing methods in inventory, etc.
(or remeasurement) multiple ledgers and accounting engines. Model
Corporate Adjustments.
IFRS AND GAAP US GAAP -VS- IFRS SIMILARITIES
There are quite a few similarities between IFRS and US GAAP
because the convergence project between IASB and FASB (the
US GAAP: 25,000 Pages IFRS: 2,500 Pages
standard setters responsible for IFRS and US GAAP respectively) has
been going on for a while (since 2003 actually).
Revenue Recognition
Fair Market (e.g. AR or inventory valuation)
Detailed Disclosure
Segment Reporting
Chart of Accounts Not Mandated
Distinction Between Tax &
External Reporting
For example, both IFRS and US GAAP have the same rules around
revenue recognition. German GAAP on the other hand does not
have revenue recognition; instead an organization would book sales
invoices directly.
US GAAP is rules-based, meaning that there are very specific
“If/Then” pronouncements. IFRS is principles-based, so there is
greater dependency on judgement. IFRS is also more vague in how
companies adopt or implement those standards.
US GAAP -VS- IFRS DIFFERENCES CONVERGENCE -VS- COMPLIANCE
There are 2 main approaches to IFRS adoption:
Approach (some examples) IFRS US GAAP
Fixed Assets Only Certain Convergence:
Fair Market Revaluation & Investments Fixed Assets
- Restructure existing applications so the primary ledgers reflect
Extraordinary Items None Rare (negative goodwill)
the standards set forth in IFRS.
Consolidation Control 2 Models
1 Step, 2 Step,
Impairment
Reversible No Reversal IFRS Primary Ledger Secondary Ledger
Reporting
Some specific differences between the two standards include: IFRS Accounting US GAAP Accounting
- Fair Market Revaluation - Under IFRS, organizations must revalue
fixed assets. Under US GAAP, only certain assets like real estate
must be revalued. SLA SLA
- Extraordinary Items - Negative goodwill has gone away under IFRS.
- Consolidation - Only entities that are under your control should
be consolidated under IFRS. AP AR FA CST
- Research and Development - Development costs are placed in the
Balance Sheet under IFRS.
Subledgers
- Inventory - IFRS does not allow LIFO or “Last In First Out.” There
are particular tax advantages to LIFO, so that is why firms practice Transactions
it. But under IFRS, LIFO is not allowed because inventory in the
Balance Sheet is not quite reflective of actual cost.
CONVERGENCE -VS- COMPLIANCE IFRS AND EBS R12 EXAMPLES
Compliance:
Inventory - IAS 02
- Maintain current accounting practices per US GAAP guidelines IFRS - GAAP Differences E-Business Approach with R12
and then build a secondary ledger to reflect the standards set Inventory Costing SCM products like Oracle
forth in IFRS. US GAAP - Allowable costing methods Inventory handle Inventory,
include LIFO, FIFO and Average Cost Costing
- They do all the IFRS options
IFRS - LIFO not allowed
- Actual w/flavors: landed, period
Inventory Valuation actual, etc.
IFRS US GAAP - Inventory is valued at the - Standard w/flavors: process,
Ledger Set
Reporting lower of cost or market, and cannot BOM, semiconductors
be written up at a subsequent date - And variances to actual
IFRS - Inventory is valued at the - Rev dates & Inventory Aging
lower of cost or net realizable value: - Reconfigure LIFO to standard
if the net realizable value of an item or actual
US GAAP Primary Ledger Secondary Ledger - Use a second IO for dual costing
that has been written down
Reporting increases subsequently, then the
US GAAP Accounting IFRS Accounting write-down is reversed under IFRS
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