Sunday, September 6, 2009

IFRS – What’s In It For Me? (Part I)

Ok, let’s face it. One of the biggest (if not the biggest) thing that can actually happen to our profession right now is the adoption of the International Financial Reporting Standards, better known as the IFRS. More than 100 countries have already adopted these standards. For the US, this has become a big, BIG issue (even the date of integration is not yet final). For Canada, now on the verge of adopting these standards, the race is on for the conversion. The target date is January of 2011, barely a year and half from now, for publicly-accountable enterprise. The official announcement was made in 2008. Now don’t get me wrong, but I’m not really sure three years is enough time for any company (whether big or small) to completely comprehend and adopt these standards. Heck, even those countries that adopted IFRS in prior years had about 5 years to prepare and even then, I don’t think any company from these countries can really claim that they fully understood these standards.

The adoption of the IFRS has affected a lot of people. Regulators, professionals, the CEOs, the CFOs, auditors, etc. – all these were (and still are being) affected. But for this blog, I’m focusing on the college students who are taking up accounting (and who plan on becoming CAs someday). I mean, poor you having to study something new =). Just kidding. I’m not trying to frighten you away (don’t shift to another course, okay?). Rather I want to dedicate this blog to these college students and basically answer one question that I know these students are asking themselves – IFRS, what’s in it for me? The answer? Plenty. So let me just enumerate some of these. They can be positive and they can also be negative. The positive will give you a chance to rejoice. The negative? Let me delay the answer (and those negative points) in my next blog.

POSITIVE: You will get to learn internationally-accepted standards, which means analyzing and comprehending financial statements of companies from both Canada and other IFRS-compliant countries will become much easier for you. It will also mean that seeking employment in other countries will be a breeze.

POSITIVE: You will learn how to solve accounting problems (based on IFRS) in the relative safety of your classroom. Believe me, making mistakes is a lot easier when you are still students than making these mistakes when you are already out there and working. The worse you can experience in college is flunking your subject; when you’re out there working, the worse is that you can get fired.

POSITIVE: There are already a lot of resources available both offline and online. Resources in the Internet are already piling up and you can have a lot of information in your hands by just going online. The same thing can’t be said five years ago. Also, Canada has the advantage in terms of learning from the experiences and learning curves of the other countries that already adopted the IFRS. These experiences are also found in these resources and can make for very enriching lessons for all concerned.

POSITIVE: Various programs to infuse IFRS in college curricula have already been launched by Big 4 firms making it easier for the various colleges and universities to integrate IFRS in the accounting subjects. Of all the entities that are applying the IFRS, I can easily say that the most resources are with the Big 4 (other than the IASB, that is) because of their international affiliations and groups focused on IFRS and its adoption.

These are the positive aspects of the IFRS for you, college students. I hope you do agree on these aspects. Do watch out for the negatives in my next blog.

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