KPMG: Companies too slow to prepare for IFRS

Companies that are due to begin their International Financial Reporting Standards (IFRS) conversion projects over the next couple of years could be underestimating the full extent of what this entails, according to KPMG. In the worst case scenario, this could lead to financial results being restated and, with the world’s financial markets currently so delicately poised, such a flurry of activity could prove damaging.
Manfred Hannich, partner in KPMG’s German firm and head of Accounting Advisory Services within KPMG, has some concerns over the apparent lack of readiness in the next swathe of countries preparing for IFRS conversion.
“Imagine how the markets, in their current state, would react if a company were forced to restate their results because of failings in their IFRS conversion projects. At a time when faith in the financial system has been shaken, this would be the last thing we need. Sadly, I believe that there is a very real likelihood of this happening as some companies seem unaware of just how big a job this is. They only get one shot at this so they must get it right.”
Hannich’s concerns revolve around a batch of countries which are due to convert to IFRS between 2009 and 2012. These include the massive growth markets of India and China as well as other key regional markets such as Canada, Korea and Brazil.
The problem with IFRS is that, as a one-off project, experience of handling the conversion is thin on the ground. So, unless companies have been farsighted enough to recruit people with the necessary skills, many may find themselves lacking in some of the requisite competencies.