A smoother path to IFRS Conversion.

For many businesses, transitioning to IFRS can seem daunting – the standards are unfamiliar, and execution can be consuming.

BBATC services are diligently customised to individual clients in order to reflect the specific operational, regulatory, and financial risks they face. Our dedicated service teams help you navigate the process from start to finish, ensuring efficient change and minimum disruption to your business. Our senior-level professionals remain accessible throughout the engagement and are backed by the global resources one of the world’s largest accounting and consulting networks.

The process steps down into four phases:
Phase 1: Preliminary Impact Assessment
Phase 2: Detailed Assessment
Phase 3: Implementation
Phase 4: Post Implementation Review

We begin working with your financial and operational professionals immediately in order to gather information and design the most efficient procedures possible. During execution our professionals will communicate regularly throughout the project in order to avoid unforeseen events and to enable smooth and timely completion.

Taste the right Experience

The experienced team at BBATC have history of working with multinational companies which use IFRSs and US GAAP in their accounting and reporting frameworks.

Accounting is often referred to as the “language of business.” It’s one of the most fundamental business skills, capable of revealing key insights into a company’s financial health and potential, and driving strategic decision-making that leads to new ventures and investment opportunities.

For professionals in non-accounting roles, understanding what’s behind an organization’s numbers can be immensely valuable. Knowing how to analyze financial statements can improve your ability to communicate results and boost collaboration with colleagues in more numbers-focused positions.

If you want to further your accounting knowledge, it’s critical to understand the standards that guide how companies record transactions and report finances. Here’s a look at the two primary sets of accounting standards—GAAP and IFRS—and how they compare.

THE KEY DIFFERENCES BETWEEN GAAP VS. IFRS

While GAAP and IFRS share many similarities, there are several contrasts, beyond the regions in which they’re applied. Here are four key differences between GAAP and IFRS.

1. The Balance Sheet

The way a balance sheet is formatted is different in the US than in other countries. Under GAAP, current assets are listed first, while a sheet prepared under IFRS begins with non-current assets.

The two standards also dictate different approaches to ordering categories on the balance sheet. GAAP calls for accounts to be listed in the order of liquidity—or how quickly and easily they can be converted to cash. The items are arranged in descending order (most liquid to least liquid): current assets, non-current assets, current liabilities, non-current liabilities, and owners’ equity.

Under IFRS, the order is reversed (least liquid to most liquid): non-current assets, current assets, owners’ equity, non-current liabilities, and current liabilities.

2. The Cash Flow Statement

A company’s cash flow statement is also prepared differently under GAAP and IFRS. This is most acutely seen in how interest and dividends are classified.

GAAP prescribes that interest paid and interest received should be classified as operating activities, while international standards are a bit more flexible. Under IFRS, a firm can choose its own policy for classifying interest based on what it considers to be appropriate. Interest paid can be placed in either the operating or financing section of the cash flow statement, and interest received in the operating or investing sections.

The same goes for dividends. GAAP specifies that dividends paid be accounted for in the financing section, and dividends received in the operating section. When following IFRS standards, companies have a choice of how they categorize dividends. Dividends paid can be put in either the operating or financing section, and dividends received in the operating or investing section.

3. Asset Revaluation

When an asset experiences a reduction in value due to market or technological factors—which in turn, causes it to fall below its current value in a company’s account—it’s classified as a loss on impairment. While impairment is often permanent, an asset’s value can increase after this loss has been recognized if the elements that caused it no longer exist.

GAAP and IFRS handle this ensuing rise in value differently. The rules of GAAP do not allow for an asset’s value to be written back up after it’s been impaired. IFRS standards, however, permit that certain assets can be revaluated up to their original cost and adjusted for depreciation.

4. Inventory Valuation Methods

GAAP and IFRS contrast in how they handle inventory valuation, too. Three methods that companies use to value inventory are FIFO, LIFO, and weighted inventory.

• FIFO stands for First In First Out. This inventory valuation method follows the natural flow of inventory, assuming that the first items in inventory (i.e. the oldest) are the first sold.
• LIFO, or Last In First Out, takes the opposite approach of FIFO. Under this method, the last items to arrive in inventory (i.e. the newest) are assumed to be the first sold.
• Weighted average looks at the weighted average cost of items remaining in inventory at the time of an associated sale, which yields a figure that can then be used to value ending inventory and the related cost of goods sold.

In the US, under GAAP, all of these approaches to inventory valuation are permitted, while IFRS allows for the FIFO and weighted average methods to be used, but not LIFO.

The accounting bodies, FASB and IASB keep themselves abreast of modern changes in the business areas and keep releasing new standards to conform to the business transactions, most recently being converged revenue recognition standards related to customer contracts (ASU 2014-09 and IFRS 15, respectively). The revenue standard’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. Entities will generally be required to make more estimates and use more judgment than under current guidance, which will be highlighted for users through increased disclosure requirements.

The world of business is constantly changing: new trends, new technology, and new regulation. At BBATC, we help our clients make sure they’re staying compliant, so they can focus on more important things: like running their business. Our dedicated Accounting and Reporting Advisory Services team has the experience and knowledge necessary to not only understand new regulations and standards, but to anticipate its impact: on your policies, on your reporting standards, and on your organization as a whole. Our professionals offer valuable guidance on:

• Revenue Recognition
•  Lease Accounting
•  Financial Instruments – Credit Losses