A recent survey "IFRS Readiness in Canada, CFERF Executive Research Report" (available at http://www.feicanada.org/files/cferf-IFRS-report%20Final.pdf ) conducted by The Canadian Financial Executives Research Foundation (CFERF), the research organisation of Financial Executives International Canada (FEI Canada) reveals that the vast majority of Canada's top financial executives don't believe their staff is prepared for the conversion to IFRS.
Manufacturing, retail and distribution industries lag furthest behind. Utilities lead the charge in terms of industry preparedness. Relatively few senior financial executives are aware of the differences between IFRS and Canadian GAAP, most have not briefed their audit committees, few have calculated the costs of conversion, and a majority doesn't yet know if their systems can handle the job.
The situation may not be very different in India.
Migration to IFRS will be an arduous task. Companies should take a structured approach to the transition from the Indian GAAP to the IFRS. The team that will lead the conversion should be well versed with both the Indian GAAP and the IFRS.
The team should be able to assess the information technology (IT) capabilities required to support the new financial reporting architecture. There is a need for appropriate training of accounting staff. Every company should draw a detailed plan for migrating to IFRS.
In the case of Canada, the Canadian Securities Administrators (CSA) has issued a staff bulletin in May 2008 requiring entities that will migrate to IFRS in the year 2011 to disclose their transition plan in the management discussion and analysis (MD&A) segment of the interim and annual financial reports beginning 2008.
Among other things it requires that every entity that will migrate to IFRS from the year 2011 or earlier should discuss the status of the key elements and timing of its changeover plan in its annual MD&A for the year beginning three years before the changeover date (e.g. annual period of the financial year ending December 31, 2008 in the case of an issuer that will change to IFRS for its financial year beginning January 1, 2011).
Key elements of an issuer's plan may address the impact of IFRS on: accounting policies, including choices among policies permitted under IFRS and implementation decisions such as whether certain changes will be applied on a retrospective or a prospective basis, information technology and data systems, internal control over financial reporting, disclosure controls and procedures, including investor relations and external communications plans, financial reporting expertise, including training requirements, and business activities, such as foreign currency and hedging activities, as well as matters that may be influenced by GAAP measures such as debt covenants, capital requirements and compensation arrangements.
The notification details the disclosure requirements in MD&A segment of interim and annual financial reports over a period of three years.
This decision by the Canadian regulators is worth considering for adoption by India too
