| With the buzz over the recent presidential election | | | | says Doher. |
| and the current financial crisis looming over the heads | | | | Another escalading cost of IFRS |
| of Americans and American Corporations, the US | | | | convergence is that of IT conversions. Along with |
| transition to International Financial Reporting | | | | new principles in costing, revenues, and expenses, |
| Standards (IFRS) seems to be placed on the back | | | | comes the burdensome cost of updating companies |
| burner for the time being. The old proverb | | | | IT software to comply. A recent publication by |
| “accounting is always changing” will hold true | | | | KPMG states that tax payers and U.S. accounting |
| once again, as the United States and the rest of the | | | | firms will see increasing costs in tax software, due to |
| world prepare for the seemingly substantial | | | | the new book methods of IFRS. The author predicts |
| transition. What some corporations may not realize | | | | that a fair amount of errors will take place in tax |
| is there may be another financial hurdle staring them | | | | departments because of the implementation of new |
| in the face from a distance. | | | | standards, software, and possible lack of proper |
| Many questions | | | | training. |
| are still left unanswered as to exactly how IFRS will | | | | Along with IT costs, come the |
| affect the US. However, one thing can be held | | | | costs of new general ledger software to comply with |
| certain when implementing new accounting standards: | | | | IFRS. Most software companies are taking a |
| costs. Accounting firms are beginning to predict | | | | somewhat dual approach to the conversion until they |
| overwhelming internal costs in the areas of employee | | | | can fully develop software based on IFRS. Several |
| training, IT conversions, and general ledger | | | | software companies such as SAP, Oracle, and Coda, |
| software. As of November 17th, 2008, the SEC has | | | | have stated that they are taking a trial and error |
| reported that the average U.S corporation will spend | | | | approach to IFRS compliance. So far, most |
| nearly $32 million in IFRS adoption costs. | | | | software companies are creating general ledger |
| Rest assured, prior to | | | | software that can comply with both GAAP and IFRS |
| convergence, is preparation and training for the | | | | principles, until they can further evaluate their |
| transition into new IFRS principles. Fortunately, | | | | software based on how U.S corporations take to |
| some training efforts have already begun by the | | | | IFRS. For the time being, software companies are |
| “Big Four” looking not only to train their | | | | mainly changing U.S. company’s general ledger |
| employees, but also their clients. "What's | | | | software through an update process, which has |
| underestimated is the educational effort it will require | | | | proven to be much more cost friendly toward U.S. |
| in the heartland, the bread basket of the U.S., | | | | corporations. Software companies have stated that |
| including banks and other customers. It will certainly | | | | as time goes on and IFRS software continues to |
| impact them all," says Bob Dohrer, partner and | | | | develop, U.S companies will most definitely see cost |
| practice leader of McGladrey & Pullen's | | | | increases in the price of software due to IFRS |
| International Assurance Services Group. Companies | | | | compliance. However, many software companies |
| will also face important trade-offs with training issues | | | | plan to cut out some costs for U.S companies by |
| due to the increased indirect costs of employees | | | | providing software training directly to the |
| training during regular working hours. If all goes as | | | | consumers. This plan will help eliminate extra training |
| planned, the “Big Four” will be responsible for | | | | costs from third party training companies, which are |
| a substantial portion of the IFRS training of other US | | | | sure to be very costly. |
| accounting firms and companies. However, plan to | | | | As the transition to IFRS continues |
| expect training efforts from third party companies | | | | to draw closer and closer, US companies can be sure |
| looking to cash in on the transition. UK companies | | | | to expect higher internal costs in upcoming years. |
| recorded an average of £625,000 for IFRS | | | | IFRS implementations and principles may be vague |
| convergence training in 2005. "From 20 to 25 | | | | for the time being, but US companies must certainly |
| percent of finance staff will need the in-depth, | | | | begin to prepare for the seemingly costly transition, |
| full-immersion courses. I'd figure the cost in the | | | | which is sure to include higher costs in the areas of |
| neighborhood of $1,000 per day, per participant,” | | | | training and software compliance. |