Although the need for International Financial Reporting Standards (IFRS) in the United States (U.S.) continues to be debated in the business and financial communities, many believe that a transition to international accounting rules is inevitable. Increasingly, the discussion is focused more on the path to adoption and the timing of a conversion. With more than 100 countries already using IFRS, proponents believe international standards will bring greater consistency and comparability to financial reporting.

Despite the momentum toward IFRS, more than half (55%) of U.S. financial executives recently surveyed by Robert Half International said they are unsure how their companies might be affected by a transition.

While the U.S. Securities and Exchange Commission (SEC) continues to review a proposed timeline for IFRS, many companies are realizing that a changeover will be easier and less costly if they begin taking steps now to prepare for what seems to be an eventual transition. A new Robert Half report, International Financial Reporting Standards for the United States: Making the Talent Transition, proposes several preliminary actions, companies can take to be ready for IFRS:

Assess the likely impact. Every organization will be affected in different ways by IFRS, and some will find it more difficult than others to make the transition. Management needs to take a big picture view of what may have to change and when. A first step for a company is to understand the differences between current accounting and reporting policies and those required by IFRS. This information can help identify the potential need for changes to policies, processes and technology.

• Initiate training. A significant transition challenge for U.S. companies is likely to be a dearth of IFRS knowledge within their organizations. Since familiarity with IFRS has not been required of American accounting and finance professionals in the past, many need to acquire this expertise. Companies can begin to identify staff members to undertake intensive IFRS training in an effort to develop in-house specialists. Training budgets also might need to be enhanced to meet the need for increased IFRS education.
• Seek internal expertise. Although training is essential, IFRS adopters in other countries have found it beneficial also to have support from professionals with firsthand transition experience. One model that has been effective is the use of a primary IFRS-experienced leader who oversees an adoption team. Companies with international operations may be able to tap the expertise of IFRS-trained professionals in other locations. These individuals can possibly be reassigned to a U.S. office for the duration of a transition project or can help train others through staff-exchange programs.
• Assess staffing needs. As the possibility of a mandated transition nears, companies will want to evaluate the adequacy of existing resources and consider additional staffing solutions, if needed. They should assess whether they have the right people to manage a transition and also enough staff to dedicate to an IFRS project team while also ensuring that the usual day-to-day financial responsibilities are met. Depending on the depth of the talent bench, firms may need to consider using a mix of core staff and financial project professionals to ensure a successful and timely transition.
• Stay current on industry developments. In addition to paying close attention to SEC guidance, companies will benefit from learning how others are making the transition, especially industry peers. In other countries, groups have often banded together to propose common solutions to industry-specific problems in applying international standards. Companies with global operations also can glean valuable implementation lessons from subsidiaries that have adopted IFRS.

Although opinions vary on the need for international accounting rules, as well as on how a transition might occur, many in the financial community now believe the issue is a matter of “when,” not “if.” With this in mind, companies would be wise to begin sizing up the magnitude of the effort that will be required for their organizations. In particular, businesses that have trimmed staff in response to the recession should give careful consideration to whether they will have the resources they need to make what seems to be an inevitable transition.

For additional information, please visit www.roberthalfmr.com/IFRSUS for a copy of International Financial Reporting Standards for the United States: Making the Talent Transition.

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