Why Privately Held Manufacturers Should Implement IFRS-ready ERP Solutions
Christine Anderson and Mitch Dwight
In this article, we'll review the different reasons why even private companies should prepare to adopt International Financial Reporting Standards (IFRS). We'll also delve into the reasons why asset-intensive industries should be excited to make the switch, and we'll discuss the specific steps involved in IFRS adoption.
Currently, the United States (US) is slow to adopt IFRS to replace Generally Accepted Accounting Practices (GAAP). While the timeline for adopting IFRS in the US may be an uncertainty, it may be inevitable. In the meantime, the International Accounting Standards Board (IASB) recently released IFRS guidelines specifically for small to medium businesses (SMBs)—which should put privately held companies on notice that IFRS is of keen interest to them as well.
In the US, some companies like IFS North America have already adopted IFRS. Companies with overseas operations may also adopt IFRS for parts of their business while running the rest of their operations on US-based GAAP.
What is IFRS, and Why Do I Care?
It is perfectly logical to think of IFRS as a new set of accounting standards that some companies will be required to adopt, and one that companies in some countries have already adopted. By looking past the regulatory requirement to holistic business dynamics, we get a better picture of what IFRS really means.
IFRS is becoming the global language of business. In the future, companies will communicate with investors in public securities, bankers, customers, merger and acquisition consultants, and other influential parties. It will be a consistent standard that everyone will be measured against—whether you are in China, the US, Canada, Mexico or anywhere else. As the global economy begins to encompass more and more mid-market manufacturers, and as more of these companies have trading partners or even subsidiaries overseas, it will be important for companies to speak the same financial language as the rest of the globe.
The IASB developed IFRS. This new method of financial reporting has already been formally adopted by many countries who are members of the European Union (EU), and more countries are adopting this standard every day. Some of the key business drivers for IFRS include the need for consistent accounting standards and disclosure requirements. If you are using US-based GAAP, or some other accounting standard, conduct international business operations, and you are dealing with IFRS, you are really operating with two different sets of records. This can be time-consuming, costly, and challenging at the end of every month, quarter, and annum as the different sets of books are reconciled.
In the meantime, you might be using management basis of accounting to run your business because US-based GAAP does not provide the best real-time information when it comes to making decisions about your business. This means that some companies may find themselves running three sets of books: IFRS, US-based GAAP, and management basis of accounting. Enterprise solutions are agile enough to deliver this degree of flexibility with minimal rework and administrative overhead, which is critical for manufacturers.
SOURCE:
http://www.technologyevaluation.com/research/articles/why-privately-held-manufacturers-should-implement-ifrs-ready-erp-solutions-20471/
Christine Anderson and Mitch Dwight
In this article, we'll review the different reasons why even private companies should prepare to adopt International Financial Reporting Standards (IFRS). We'll also delve into the reasons why asset-intensive industries should be excited to make the switch, and we'll discuss the specific steps involved in IFRS adoption.
Currently, the United States (US) is slow to adopt IFRS to replace Generally Accepted Accounting Practices (GAAP). While the timeline for adopting IFRS in the US may be an uncertainty, it may be inevitable. In the meantime, the International Accounting Standards Board (IASB) recently released IFRS guidelines specifically for small to medium businesses (SMBs)—which should put privately held companies on notice that IFRS is of keen interest to them as well.
In the US, some companies like IFS North America have already adopted IFRS. Companies with overseas operations may also adopt IFRS for parts of their business while running the rest of their operations on US-based GAAP.
What is IFRS, and Why Do I Care?
It is perfectly logical to think of IFRS as a new set of accounting standards that some companies will be required to adopt, and one that companies in some countries have already adopted. By looking past the regulatory requirement to holistic business dynamics, we get a better picture of what IFRS really means.
IFRS is becoming the global language of business. In the future, companies will communicate with investors in public securities, bankers, customers, merger and acquisition consultants, and other influential parties. It will be a consistent standard that everyone will be measured against—whether you are in China, the US, Canada, Mexico or anywhere else. As the global economy begins to encompass more and more mid-market manufacturers, and as more of these companies have trading partners or even subsidiaries overseas, it will be important for companies to speak the same financial language as the rest of the globe.
The IASB developed IFRS. This new method of financial reporting has already been formally adopted by many countries who are members of the European Union (EU), and more countries are adopting this standard every day. Some of the key business drivers for IFRS include the need for consistent accounting standards and disclosure requirements. If you are using US-based GAAP, or some other accounting standard, conduct international business operations, and you are dealing with IFRS, you are really operating with two different sets of records. This can be time-consuming, costly, and challenging at the end of every month, quarter, and annum as the different sets of books are reconciled.
In the meantime, you might be using management basis of accounting to run your business because US-based GAAP does not provide the best real-time information when it comes to making decisions about your business. This means that some companies may find themselves running three sets of books: IFRS, US-based GAAP, and management basis of accounting. Enterprise solutions are agile enough to deliver this degree of flexibility with minimal rework and administrative overhead, which is critical for manufacturers.
SOURCE:
http://www.technologyevaluation.com/research/articles/why-privately-held-manufacturers-should-implement-ifrs-ready-erp-solutions-20471/
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