Advice on the introduction of new standards

International Accounting Reporting Standards (IFRS) are constantly changing. Individual IFRS are regularly subject to fundamental revisions. Furthermore the changes are the result of the so-called "Improvement Projects", official interpretations and industry-specify application guidance. Implementation of these changes is often demanding and complex for the parent company and its subsidiaries.

Coming to terms with this frequency of change calls for an appropriate organization which incorporates numerous areas of the company: external reporting, internal (management) reporting, risk management, planning and controlling are affected just as much as the tax department, treasury, IT and eventually human resources as well.

The ongoing changes to reporting standards call for a systematic procedure. They also confront the company with considerable technical demands with many changes consisting of complex special topics which are not part of the day to day routine. A comprehensive understanding of the planned or completed changes is key.

Sound analysis is key for a successful implementation

It has to be analysed to which extent the company or the group is affected by the accounting change. This is the basis to assess actual effects on corporate divisions and plan implementation measures. Parallel, directives and guidelines should be revised and employee trainings planned and rolled out.

For example, the new standards IFRS 10, 11 and 12 have to be applied in 2013 retrospectively. Entities have to prepare themselves to change from proportionate consolidation to equity accounting for jointly controlled entities (joint ventures). The new standards will impact balance sheet figures and Key Performance Indicators (KPIs). Consequences of those changes should be considered. Additional requirements for notes disclosure have been issued. They have to be generated promptly and efficiently, ie, for structured companies that are not consolidated.

Also the new scheduled leasing standard is foreshadowed. In the future the lessee has to recognize all leases in the balance sheet. There will also be significant changes for the lessor. All parent entity and nearly all subsidiaries will be affected. Processes and probably IT systems have to be implemented for the whole group to administrate lease contract data, that currently is only available locally, to generate necessary data processing and to manage the reporting.

The exposure draft to Revenue Recognition may have similar important impacts. Here, too, a sound scoping and impact analysis will result in a smooth implementation.

PwC assists with the analysis and implementation of new standards

PwC assists companies in analysing the effects of new accounting standards and regulations and in implementing relevant changes reliably and pragmatically. The objective is to integrate the new standards and regulations into IT systems and processes in such a way that the employees are able to apply the new rules and regulations reliably on their own. PwC experts achieve this with a wide variety of tools and with field-tested project management. They incorporate selected specialists for complex topics such as deferred taxes, pension obligations, financial instruments, leasing, company mergers and consolidation in an effective manner. Companies will benefit from years of experience PwC has gained in similar projects.