Effects of IFRS on IS - Financial Executives International

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Effects of IFRS on IS - Financial Executives International

The ong>Effectsong> ong>ofong> ong>IFRSong> Conversion on

Information Systems

KPMG LLP

March 2009

ADVISORY


Outline

ong>IFRSong> Overview and Current State ong>ofong> Adoption

ong>IFRSong> Transition Milestones and Timeline

Organizational Impact

ong>IFRSong> and Information Systems Impact

Conversion Approach and Considerations

Elements ong>ofong> a Successful ong>IFRSong> Conversion

The KPMG Approach to ong>IFRSong>



Methodology

Tools

Appendix A

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a Swiss cooperative. All rights reserved. Printed in the USA. KPMG and the KPMG logo are registered trademarks ong>ofong> KPMG International.

1


ong>IFRSong> Overview and Current State ong>ofong> Adoption

What is ong>IFRSong>

ong>IFRSong> is a globally-accepted set ong>ofong> accounting standards and interpretations established by the

International Accounting Standards Board (IASB) and its interpretative body the International

Financial Reporting Interpretations Committee (IFRIC).

Like U.S. GAAP, ong>IFRSong> are investor-oriented and based on a framework that is similar to the

FASB’s.



ong>IFRSong> does not provide as much detailed and prescriptive implementation guidance as found in

U.S. GAAP. As a result, there are more instances when judgment must be exercised.

The selected options need to be supported by clear analysis and transparent disclosures ong>ofong>

critical accounting policies and estimates.

Widespread ong>IFRSong> adoptions

began in 2005, and the standards

are now in use in more than 100

countries.

ong>IFRSong> Adoption Map

Countries that require or

permit ong>IFRSong> or have fixed

dates to implement

Countries seeking convergence

with the IASB or pursuing

adoption ong>ofong> ong>IFRSong>

© 2008 KPMG LLP, a US limited liability partnership and a member firm ong>ofong> the KPMG network ong>ofong> independent member firms affiliated with KPMG International,

a Swiss cooperative. All rights reserved. Printed in the USA. KPMG and the KPMG logo are registered trademarks ong>ofong> KPMG International.

Source: KPMG International, 2008

2


ong>IFRSong> Overview and Current State ong>ofong> Adoption (continued)

State ong>ofong> Adoption in the United States

In December 2007, the SEC eliminated the requirement for reconciliation to U.S. GAAP for

foreign private issuers using ong>IFRSong> as issued by the IASB.

The SEC issued as ong>ofong> November 14, 2008 a proposed “roadmap” for phasing in mandatory ong>IFRSong>

filings by U.S. public companies beginning for years ending on or after December 15, 2014.

The roadmap is conditional on progress towards “milestones” that would demonstrate

improvements in both the infrastructure ong>ofong> international standard setting and the preparation ong>ofong>

the U.S. financial-reporting community.

If the conditional milestones are satisfactorily achieved by 2011, the SEC would then consider

rulemaking to phase in requirements for U.S. public companies to file financial statements using

ong>IFRSong> as issued by the IASB.

Some U.S. companies that operate within an “ong>IFRSong> industry” would be permitted to begin using

ong>IFRSong> as soon as 2009 financial statements if the proposal is adopted unchanged.

© 2008 KPMG LLP, a US limited liability partnership and a member firm ong>ofong> the KPMG network ong>ofong> independent member firms affiliated with KPMG International,

a Swiss cooperative. All rights reserved. Printed in the USA. KPMG and the KPMG logo are registered trademarks ong>ofong> KPMG International.

3


ong>IFRSong> Transition Milestones and Timeline

1. Assess Impact and Develop

Conversion Workplan

Note: Illustrative timeline for US large Accelerated Filers.

Q3 2008

Assess

impact ong>ofong> conversion

Hold educational/

informational

discussions regarding

ong>IFRSong> with management

and the audit committee

31 Dec 2008

Source: KPMG LLP (U.S.), 2008

31 Dec 2009

Discuss initial

assessment ong>ofong>

impact

2. Design 3. Build, Implement,

and Roll out

31 Dec 2010

31 Dec 2011

Design and Implement

conversion

31 Dec 2012 31 Dec 2013 31 Mar 2014 31 Dec 2014

Start first

ong>IFRSong> year

4. Long term approach

/Monitor

Comparative years on ong>IFRSong> basis (2 years) Year ong>ofong> adoption - large accelerated filers

Date ong>ofong> Transition

Recasted

2012 under

ong>IFRSong>

© 2008 KPMG LLP, a US limited liability partnership and a member firm ong>ofong> the KPMG network ong>ofong> independent member firms affiliated with KPMG International,

a Swiss cooperative. All rights reserved. Printed in the USA. KPMG and the KPMG logo are registered trademarks ong>ofong> KPMG International.

2013 A/R 2014 A/R

Update

qualitative

discussion

Recasted

2013 under

ong>IFRSong>

Many seek to separate results

from impact ong>ofong> change in

GAAP

Interims on

ong>IFRSong> basis

12/31/14:

Reporting Date

The SEC proposed to allow U.S. public companies that meet two criteria to begin filing ong>IFRSong> financial statements on or

after December 15, 2009.

• A majority ong>ofong> peer-group companies report financial information using ong>IFRSong>.

• The candidate U.S. company is one ong>ofong> the top 20 peer-group companies.

Business

as usual

First ong>IFRSong>

financial

statements

4


Organizational Impact – ong>IFRSong> Beyond Finance

The conversion to ong>IFRSong> will not only represent a fundamental change to accounting and

financial reporting but will also have far reaching implications for key areas ong>ofong> the business

ong>IFRSong>






Compliance

Requirements

How will the new

reporting requirements

be applied?

What additional

information will be

required?

Business

implications

What are the wider

implications on how the

business is managed?

What are the impacts on P&L

and Balance sheet?

How does the tax

reporting change?

Data availability in

source systems

Process redesign

Systems scalability

& architecture

Organization design

Controls

Financial Reporting

and Tax Impact

Regulatory & Risk

reporting

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Do ledgers and business systems

contain the necessary data and if so,

how are they provided?

Which processes must be changed to

capture and report new data?

How many adjustments are necessary

to meet the additional requirements

arising from ong>IFRSong>?

Is there a sufficient number ong>ofong> suitable

and trained employees working in the

right position?

To what extent will controls need to be

modified to comply with regulations?

What will be the impact on the P&L, the

B/S, and measurement and reporting ong>ofong>

income taxes?

What impact will ong>IFRSong> have on

regulatory capital requirements and risk

appetite?

5


Assessing the Effect ong>ofong> ong>IFRSong> on Information Systems

ong>IFRSong> is an accounting-driven initiative but it will drive major changes to information

systems, data, internal controls, business processes and personnel.





A major impact ong>ofong> converting to ong>IFRSong> will be the

increased challenge within the company to capture,

analyze and report new data to comply with the

changes in accounting.

The organization must have a detailed understanding

ong>ofong> the accounting differences, and the impact and

risks ong>ofong> these differences, before they can understand

and evaluate the needed system changes.

The data and systems impact analysis is time

consuming, and should take place at the initiation ong>ofong>

the conversion - it is the foundation for determining

the potential IT impact and translating the accounting

differences to technical system specifications.

One ong>ofong> the difficulties organizations ong>ofong>ten face in

creating the technical specifications is a lack ong>ofong>

understanding ong>ofong> the detailed end-to-end flow ong>ofong> data

from the source systems (including models) to the

general ledger.

Source: KPMG LLP (U.S.), 2008

© 2008 KPMG LLP, a US limited liability partnership and a member firm ong>ofong> the KPMG network ong>ofong> independent member firms affiliated with KPMG International,

a Swiss cooperative. All rights reserved. Printed in the USA. KPMG and the KPMG logo are registered trademarks ong>ofong> KPMG International.

6


ong>IFRSong> and Information Systems – Key Learnings

Since IT costs and level ong>ofong> effort is usually a significant component ong>ofong> an ong>IFRSong> conversion,

advance planning and integration with other initiatives will yield substantial benefits






ong>IFRSong> costs associated with information systems and data

are generally over 50 percent ong>ofong> the overall costs to convert.

Organizations benefit when they identify and integrate the

efforts ong>ofong> business and IT early in the ong>IFRSong> conversion

process.

IT efforts will comprise a mix ong>ofong> short and long-term projects

within the organization’s overall ong>IFRSong> conversion initiative.

The degree to which an organization builds short-term

workarounds or long-term solutions that integrate the

changes into the business models and management culture

is a function ong>ofong> time, cost, resource commitment, and other

competing factors.

The ong>IFRSong> conversion effort provides opportunities for

achieving synergies with other IT projects and strategic

initiatives, such as ERP implementation, system

consolidation, and internal control automation.

Based on our experience with ong>IFRSong>

conversion projects in Europe:

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a Swiss cooperative. All rights reserved. Printed in the USA. KPMG and the KPMG logo are registered trademarks ong>ofong> KPMG International.

ong>IFRSong> conversions have more ong>ofong>ten led to

enhancement, rather than system

replacement.

Multiple global legacy systems can create

problems for conversion as reporting

entities learn to convert to ong>IFRSong>.

Some companies have used the

conversion process as an opportunity to

implement a new consolidation system

while others have been concerned about

introducing too much change at any one

time.

Some companies are electing to embed

ong>IFRSong> in local ledgers where appropriate

but many have left the decision on how

they address the issue to individual

entities.

7


Information Systems Impact –

Types ong>ofong> Changes to Information Systems

ong>IFRSong> conversion affects information systems in many ways, depending on the nature ong>ofong> the

accounting changes and the existing information systems

Types ong>ofong> Change Description

New data requirements

Selection and implementation ong>ofong> new

system

Reconfiguration ong>ofong> existing systems

Interface and mapping changes

Modifications to existing systems

Consolidations ong>ofong> entities

Reporting packs

Financial reporting tools

Changes to the chart ong>ofong> accounts

New accounting disclosure and recognition requirements may result in: more detailed presentation ong>ofong>

information: and/or, new data elements or fields to be recorded; and/or information to be calculated on a

different basis.

Where previous financial reporting standards did not require the use ong>ofong> a system, or the existing system

is inadequate for ong>IFRSong> reporting, it may be necessary to implement new song>ofong>tware.

Existing systems may have capabilities built-in to cater for specific ong>IFRSong> changes, particularly the larger

Enterprise Resource Planning (ERP) systems and high end general ledger packages.

With the introduction ong>ofong> new source systems and the de-commissioning ong>ofong> old systems, interfaces may

need to be changed or developed and there may be changes to existing mapping tables to the financial

system.

Where separate reporting tools are used to generate the financial statements, the mapping to these

tools will require updating to reflect changes made to the chart ong>ofong> accounts.

New reports and calculations may be required to accommodate ong>IFRSong>. Spreadsheets and models used

by management as an integral part ong>ofong> the financial reporting process should be included when

considering the required systems modification.

Under ong>IFRSong>, there will potentially be changes to the number and type ong>ofong> entities which need to be

included in the group consolidated financial statements.

Reporting packs may need to be modified to: gather additional disclosure information from branches or

subsidiaries operating on a standard general ledger package; or collect information from subsidiaries

that use different financial accounting packages.

Reporting tools can be used to: perform the consolidation and the financial statements based on data

transferred from the general ledger; or prepare only the financial statements based on receipt ong>ofong>

consolidated information from the general ledger

There will almost always be a change to the chart ong>ofong> accounts due to re-classifications and additional

reporting criteria.

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8


Information Systems Impact –

Time and Complexity ong>ofong> Changes to Information Systems

Management’s IT solution for each accounting topic area may differ in complexity, time

required and cost based upon company-specific circumstances

Source: KPMG LLP (U.S.), 2008

IT Conversion Effort

This chart illustrates a company-specific situation and is

not intended to be a general representation ong>ofong> the IT

impact ong>ofong> ong>IFRSong> for all companies.

© 2008 KPMG LLP, a US limited liability partnership and a member firm ong>ofong> the KPMG network ong>ofong> independent member firms affiliated with KPMG International,

a Swiss cooperative. All rights reserved. Printed in the USA. KPMG and the KPMG logo are registered trademarks ong>ofong> KPMG International.

9


Conversion Approach

The IT conversion approach is generally influenced by the IT maturity level, time to adopt,

expected project costs, resource commitment and availability, and other competing efforts

Approach Description Benefits

Shadow Reporting /

Workarounds

Hybrid Approach

Full Conversion

Management’s solutions based on end-user

developed spreadsheets and models to

support ong>IFRSong> reporting. Some organizations

might use this approach as a short-term

remedy combined with a long-term plan.

Approach based on a weighted balance ong>ofong>

workarounds and full-conversion process

solutions according to the organization’s needs

and readiness in each ong>ofong> those areas.

Workarounds are implemented as a short-term

remedy while long-term process solutions are

developed.

Process solution based on changes made to

source systems feeding sub-ledger and GL

systems. This approach enables ong>IFRSong>

accounting and reporting at the source and

better supports changes to the organization

beyond financial reporting, such as changes to

management information reports, operational

KPIs, and regulatory reporting.

• Low-cost to implement

• Quicker implementation

• Low impact on the IT organization

• Planned conversion

• Manageable up-front costs

• Manageable impact to operations

and IT

ong>IFRSong> accounting at the source level

• Leverage ong>ofong> synergies identified

with other transformational

initiatives at the organization

• Reduced costs associated with

duplication ong>ofong> efforts

• Alignment with business objectives

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a Swiss cooperative. All rights reserved. Printed in the USA. KPMG and the KPMG logo are registered trademarks ong>ofong> KPMG International.

Potential Issues

• High cost ong>ofong> maintenance

• Increased financial reporting risks

• Data reliance

• Strong reliance on workarounds

and manual procedures



Increased financial reporting risks

and data reliance issues during the

initial phase

Longer implementation plan (shortterm

solutions being replaced by

long-term)

• Higher level ong>ofong> planning and

operational and IT involvement

• Potentially higher costs associated

with the implementation

• Requires certain level ong>ofong>

organizational readiness

In general we have observed a number ong>ofong> organizations using a hybrid approach and in some cases workarounds as a

short-term solution for ong>IFRSong>. However those workarounds are generally manual and do not provide for a sustainable

solution, requiring the subsequent implementation ong>ofong> a full conversion, long-term solution.

10


Parallel Accounting Example – SAP & Oracle

One ong>ofong> the primary challenges associated with the IT component ong>ofong> the conversion is the

parallel accounting required for the transition period

SAP has developed its strategy for ong>IFRSong> conversion whereby a transaction can be entered once

and entered to two (or more) separate ledgers based on established business rules

This approach is available using SAP’s “New General Ledger” (available in SAP ECC 6.0)

“Traditional R/3 based General Ledger“ “New G/L“

FI-AA

Accounting transaction

Local GAAP/ong>IFRSong>

D C

MM

Local GAAP

ong>IFRSong>

Subsidiary financial statement

Local GAAP

D C

CO/PS

Local GAAP / ong>IFRSong> -

company code

General

Ledger

Subsidiary financial statement

ong>IFRSong>

Accounting transaction

FI-AA

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a Swiss cooperative. All rights reserved. Printed in the USA. KPMG and the KPMG logo are registered trademarks ong>ofong> KPMG International.

CO

Leading Ledger

Local GAAP

Local GAAP

Local GAAP

D C

New G/L

MM

Non-Leading

Ledger ong>IFRSong>

ong>IFRSong> ong>IFRSong>

D C

Subsidiary financial statement Subsidiary financial statement

Local GAAP ong>IFRSong>

11


Parallel Accounting Example – SAP & Oracle (continued)

Oracle Corporation has articulated its ong>IFRSong> conversion strategies for Oracle EBS Release 11i

and Release 12 – relative to its financial reporting components

Release 11i – does not have an automated parallel

ledger capability, but can enable manual recurring

adjustments to derive an ong>IFRSong> ledger from a U.S.

GAAP ledger

Release 12 – ong>ofong>fers a more flexible approach for

comparative reporting:

A complete secondary ledger can be created,

complete with “alternative accounting”

or

An automated adjusting ledger (or segment) to

derive the ong>IFRSong> ledger from a US GAAP ledger

This slide outlines the approach to keep US GAAP as the

leading ledger. However, management must identify the

timing best suitable to convert to ong>IFRSong> as the leading ledger

and potentially derive US GAAP results from the ong>IFRSong> ledger

Base Ledger

ong>IFRSong> Principles

ong>IFRSong> COA

ong>IFRSong> Calendar

CAD

Adjusting Ledger

Regulations

ong>IFRSong> COA

ong>IFRSong> Calendar

CAD

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a Swiss cooperative. All rights reserved. Printed in the USA. KPMG and the KPMG logo are registered trademarks ong>ofong> KPMG International.

R12 - A complete secondary ledger can be

created, complete with “alternative alternative

accounting”

accounting

Dr Cr

Subledger

Subledger

Accounting

Accounting

A single sub -

ledger

transaction can

create multiple

accounting

representations

(and in multiple

currencies)

12


Elements ong>ofong> a Successful ong>IFRSong> Conversion

Start early

Plan to utilize synergies with other projects

Corporate-level sponsorship and strong governance

Engage key stakeholders and resources

Invest in education at all levels, including shareholders

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a Swiss cooperative. All rights reserved. Printed in the USA. KPMG and the KPMG logo are registered trademarks ong>ofong> KPMG International.

13


Elements ong>ofong> a Successful ong>IFRSong> Conversion - Transformational Opportunities

To the extent that the organization is engaged in transformational projects, it should plan

and execute the ong>IFRSong> conversion initiative in alignment with those projects

Transformation projects

include:

Process Transformation

Shared Service Center

Chart ong>ofong> Accounts

Financial Close

Process Standardization

Systems Transformation

Systems Implementation

• ERP

• Consolidation

• Supply Chain

• Business Intelligence

Standardization ong>ofong> Systems

Organizational Transformation

Business Unit Reorganization

Business Unit Integration

Business Unit Disposal

Global ERP

implementation

Regional shared

services

Transformational Case Studies

A large financial institution was undergoing a global SAP implementation when it

embarked on an ong>IFRSong> conversion initiative. Once the company determined its future

accounting policies under ong>IFRSong>, the process ong>ofong> conversion was assisted by the SAP

implementation in process. For example, the Company had developed a detailed

understanding ong>ofong> its business processes and practices as a part ong>ofong> the requirements

planning (blueprinting) phase ong>ofong> the implementation project, including the detailed data

sources and structures. These activities greatly aided the ong>IFRSong> IT impact analysis.

The company had to repeat certain aspects ong>ofong> its global template blueprinting phase to

accommodate the changes due to ong>IFRSong>. Additionally, the use ong>ofong> a parallel accounting

strategy (recommended by SAP) for ong>IFRSong> conversion added additional complexities.

Nonetheless, the close coordination ong>ofong> the ong>IFRSong> and SAP implementation activities

yielded the most efficient process for each initiative.

A global consumer markets company had subsidiaries worldwide with disparate

systems and processes. Although management knew a share services business model

could help it achieve cost and efficiency benefits, it was reticent to begin such a

comprehensive effort.

As part ong>ofong> the ong>IFRSong> conversion project, the company standardized its accounting

policies for inventory, fixed asset, and consolidations (among others) and modified or

replaced its procurement, supply chain, fixed asset, and general ledger applications at

many locations. It also modified its business process procedures and controls.

Management realized that the newly standardized business model and the extensive

understanding ong>ofong> detailed business processes and systems would greatly aid in the

migration to a regional shared service center. When it undertook this project, leveraging

the ong>IFRSong> conversion activities enabled it to save considerable time and money.

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a Swiss cooperative. All rights reserved. Printed in the USA. KPMG and the KPMG logo are registered trademarks ong>ofong> KPMG International.

14


Elements ong>ofong> a Successful ong>IFRSong> Conversion - Transformational Opportunities

Impact on source systems, data

architecture

Impact on the organization’s

Operating Model

Impact on employee compensation

Impact on local reporting

Impact on other organizational

initiatives (FT, ERP, etc)

Impact on Investor Relations and

communications to the street

Impact on source systems

Impact on target setting, budgeting,

forecasting and management

reporting

Impact on financial reporting

systems

Accounting gap analysis

Our experience in Europe shows that

many companies saw ong>IFRSong> conversions as

“just” an accounting exercise, making it a

compliance project instead ong>ofong> a business

mandate and therefore missing a number

ong>ofong> transformational opportunities that

comes with a well planned ong>IFRSong>

conversion

© 2008 KPMG LLP, a US limited liability partnership and a member firm ong>ofong> the KPMG network ong>ofong> independent member firms affiliated with KPMG International,

a Swiss cooperative. All rights reserved. Printed in the USA. KPMG and the KPMG logo are registered trademarks ong>ofong> KPMG International.

People and Change dimension increases

ong>IFRSong> as a catalyst for

finance transformation,

cost reduction,

organizational change”

“This is an

accounting

project!”

15


The KPMG Approach to ong>IFRSong>

What are the key

differences in

accounting and

disclosures?

What are further

impacts ong>ofong> the

ong>IFRSong>

implementation?

What are the considerations for planning

the next steps ong>ofong> the ong>IFRSong> conversion?

© 2008 KPMG LLP, a US limited liability partnership and a member firm ong>ofong> the KPMG network ong>ofong> independent member firms affiliated with KPMG International,

a Swiss cooperative. All rights reserved. Printed in the USA. KPMG and the KPMG logo are registered trademarks ong>ofong> KPMG International.

How does ong>IFRSong>

impact data,

systems, and

processes?

What are the

change

management and

training

requirements?

16


The KPMG Approach to ong>IFRSong>

Integration ong>ofong> All Project Workstreams

We understand that an effective approach to ong>IFRSong> conversion must include all the

workstreams within your company that will have a role in a successful project

Accounting/

Reporting

Tax

Data

Technology

Processes

Controls &

Compliance

Business

Change Mgmt &

User Readiness

PMO

1. Assess Impact and Develop

Conversion Workplan

2. Design

3. Build, Implement,

and Roll out

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a Swiss cooperative. All rights reserved. Printed in the USA. KPMG and the KPMG logo are registered trademarks ong>ofong> KPMG International.

4. Long term approach /

Monitor

17


The KPMG Approach to ong>IFRSong>

KFiRST

KFiRST – is a web-based tool designed to assist with

existing GAAP to ong>IFRSong> accounting policy gap

assessment, implementation impact analysis, project

management and project status reporting.

Key Features:

Includes KPMG’s proprietary, detailed ong>IFRSong> accounting content to

facilitate the accounting assessment

Content is customizable at set-up to correspond to client’s industry

KFiRST is set-up to mimic the company’s organizational structure for

status reporting, project dashboards and workflow approvals (if

desired). Set-up options include:

• Geographic Region

• Business Segment

• Location/Subsidiary

Provides for line-by-line ong>IFRSong> accounting policy analysis and decisions

at each business unit for which assessment is required.

Captures qualitative assessment ong>ofong> tax, process, information systems,

controls and other impacts related to the conversion.

Project management and workflow features enable easy progress

tracking and review/approval ong>ofong> completed assessment items.

Reporting features:

• Data-driven reports that are highly visual and meaningful to CFO’s

and executive management

• Flexible reports with views on regional and local results

• Reports include status by business segment, key issues,

accomplishments, gaps identified and potential impacts and

resolution status

Built on the Archer Technologies SmartSuite Framework

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a Swiss cooperative. All rights reserved. Printed in the USA. KPMG and the KPMG logo are registered trademarks ong>ofong> KPMG International.

18


The KPMG Approach to ong>IFRSong>

Key Tools, Templates, and Accelerators

Our approach includes many tools used

to create and deliver key information in

support ong>ofong> decision making steps within

the methodology

Our toolkit includes:

Key Tools, Templates and Accelerators

KFiRST

ong>IFRSong> Gap Analysis Method Guide

Complexity Meter

Rapid Assessment Questionnaire

Quick Scan

IT Impact Analysis

ong>IFRSong> Roadmap Tool and Template

Training Needs Assessment Tool

‘As Is’ vs. ‘To Be’ Process Summary

Organizational Readiness Assessment

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a Swiss cooperative. All rights reserved. Printed in the USA. KPMG and the KPMG logo are registered trademarks ong>ofong> KPMG International.

© Copyright IBM Corporation 2008

19


Appendix A

KPMG ong>IFRSong> Reference Literature

©2008 KPMG LLP, a U.S. limited liability partnership and a member firm ong>ofong> the KPMG network ong>ofong> independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.


KPMG Publications on ong>IFRSong>

Insights into ong>IFRSong> 4th edition 2007/8 (September 2007)

Insights into ong>IFRSong> focuses on the application ong>ofong> standards in practice and explains the conclusions we have reached on many interpretative issues. It is based on actual

questions that have arisen in practice around the world and includes illustrative examples to elaborate or clarify the application ong>ofong> the standards.

The 4th edition 2007/8 ong>ofong> Insights into ong>IFRSong> is based on those ong>IFRSong>s that were in issue at August 1, 2007 and are applicable for an annual period beginning on or after

January 1, 2007. The 4th edition 2007/8 includes new chapters on presentation and disclosure ong>ofong> financial instruments (ong>IFRSong> 7), service concession arrangements (IFRIC

12) and operating segments (ong>IFRSong> 8); it also includes extended guidance on share-based payments and extended application guidance on other topics throughout the

book based on real experiences.

ong>IFRSong> compared to U.S. GAAP (July 2007)

The purpose ong>ofong> this publication is to assist in understanding the significant differences between ong>IFRSong>s and U.S. GAAP. This publication does not discuss

every possible difference; rather, it is a summary ong>ofong> those differences that we have encountered most frequently in practice, resulting from either a

difference in emphasis or specific application guidance. The focus ong>ofong> this publication is on recognition, measurement and presentation, rather than on

disclosure; therefore disclosure differences generally are not discussed. However, areas that are disclosure based, such as segment reporting, are

included.

Generally the standards and interpretations included in this publication are those that are mandatory for an annual reporting date ong>ofong> December 31, 2007,

i.e., ignoring standards and interpretations that might be adopted before their effective dates.

ong>IFRSong>: An overview (August 2007)

ong>IFRSong>: An overview is an executive summary ong>ofong> the key requirements ong>ofong> ong>IFRSong>s.

This edition is based on ong>IFRSong>s in issue at August 1, 2007 that are applicable for financial periods beginning on or after January 1, 2007.

©2008 KPMG LLP, a U.S. limited liability partnership and a member firm ong>ofong> the KPMG network ong>ofong> independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

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KPMG Publications on ong>IFRSong>

ong>IFRSong> compared to U.S. GAAP: An overview (November 2007)

The purpose ong>ofong> this publication is to provide a summary ong>ofong> the significant differences between ong>IFRSong> and U.S. GAAP as addressed in detail within the companion

book, ong>IFRSong> compared to U.S. GAAP (July 2007). This publication does not discuss every possible difference, but rather those differences that we have encountered

most frequently in practice, resulting from either a difference in emphasis or specific application guidance.

Illustrative financial statements (August 2007)

The purpose ong>ofong> this publication is to assist you in preparing financial statements in accordance with ong>IFRSong>. It illustrates one possible format for financial statements,

based on a fictitious multinational corporation involved in general business; the corporation is not a first-time adopter ong>ofong> ong>IFRSong>. This publication reflects ong>IFRSong>s in

issue at August 1, 2007 that are required to be applied by an entity with an annual period beginning on January 1, 2007 (“currently effective” requirements). ong>IFRSong>s

that are effective for annual periods beginning after January 1, 2007 (“forthcoming” requirements) have not been adopted early in preparing these illustrative

financial statements. This publication does not illustrate ong>IFRSong> 4 Insurance Contracts or IAS 26 Accounting and Reporting by Retirement Benefit Plans.

Financial instruments accounting (February 2006)

This publication provides a comprehensive overview ong>ofong> the existing IAS 32 and IAS 39 to address accounting for financial instruments with an emphasis on

practical application issues. It provides an update to the second edition issued in March 2004, taking into account guidance issued subsequently as well as

examples based on practical experience from working with KPMG member firms' clients.

Commentary is also provided on new requirements that apply only to periods beginning on or after January 1, 2007, but which may be adopted earlier; in

particular, ong>IFRSong> 7 Financial Instruments: Disclosures is discussed as a forthcoming requirement.

©2008 KPMG LLP, a U.S. limited liability partnership and a member firm ong>ofong> the KPMG network ong>ofong> independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

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KPMG Publications on ong>IFRSong>

Illustrative condensed interim financial statements (March 2006)

The purpose ong>ofong> this publication is to assist you in preparing condensed interim financial statements in accordance with IAS 34 Interim Financial Reporting. It

illustrates one possible format for condensed interim financial statements, based on a fictitious multinational corporation involved in general business; the

corporation is not a first-time adopter ong>ofong> ong>IFRSong>.

Illustrative interim financial statements: first-time adoption in 2005 (April 2005)

The purpose ong>ofong> this publication is to assist you in preparing your first ong>IFRSong> interim financial statements in accordance with ong>IFRSong>s, in particular IAS 34 Interim

Financial Reporting. It illustrates one possible format for condensed interim financial statements prepared for part ong>ofong> a period covered by an entity's first ong>IFRSong>

annual financial statements, based on a fictitious multinational corporation involved in general business and adopting ong>IFRSong> as its primary basis ong>ofong> accounting at

January 1, 2005.

• Illustrative financial statements: first-time adoption in 2005 (November 2004)

The purpose ong>ofong> this publication is to assist you in preparing your first financial statements in accordance with ong>IFRSong>. It illustrates one possible format for full financial

statements, based on a fictitious multinational corporation involved in general business and adopting ong>IFRSong> as its primary basis ong>ofong> accounting at December 31, 2005.

ong>IFRSong> 1 First-time Adoption ong>ofong> ong>IFRSong>s has been applied in making the transition from previous GAAP to ong>IFRSong>s. The publication is based on ong>IFRSong>s adopted by the IASB

at April 30, 2004 which are known as the “stable platform”. Where a standard allows a choice ong>ofong> accounting treatments, this publication illustrates what used to be

called the “benchmark” treatment. In the case ong>ofong> ong>IFRSong> 1, a number ong>ofong> implementation choices exist and only one possible combination is illustrated. The publication

does not repeat all the requirements ong>ofong> ong>IFRSong> 1 and should be read in conjunction with the standard and related implementation guidance.

©2008 KPMG LLP, a U.S. limited liability partnership and a member firm ong>ofong> the KPMG network ong>ofong> independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

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KPMG Publications on ong>IFRSong>

The application ong>ofong> ong>IFRSong>: Disclosures in practice (December 2006)

This publication is based on a review ong>ofong> the consolidated financial statements ong>ofong> 199 companies from 16 countries for an annual period ending on or after June 30, 2005;

most companies had a balance sheet date ong>ofong> December 31, 2005. The publication illustrates disclosures made by these companies in their consolidated financial

statements that the IFR Group believes may be useful in assessing the type ong>ofong> information being disclosed in practice, and the formats and methods ong>ofong> disclosure. Each

section is accompanied by an overview ong>ofong> the disclosures that relate to that topic.

ong>IFRSong> disclosure checklist (August 2007)

The purpose ong>ofong> this Disclosure Checklist is to assist you in preparing financial statements in accordance with ong>IFRSong> by identifying the disclosures required.

The Disclosure Checklist reflects ong>IFRSong>s in issue at August 1, 2007 that are required to be applied by an entity with an annual period beginning on or after January 1,

2007.

Sections 1 to 4 ong>ofong> the publication identify ong>IFRSong> disclosure requirements that are effective for annual periods beginning on January 1, 2007 ("currently effective"

requirements)

Section 5 ong>ofong> the publication identifies the additional ong>IFRSong> disclosure requirements for a first-time adopter ong>ofong> ong>IFRSong>.

Section 6 ong>ofong> the publication identifies ong>IFRSong> disclosure requirements that are effective for annual periods beginning after January 1, 2007 ("forthcoming" requirements)

Illustrative financial statements: banks (September 2006)

The purpose ong>ofong> this publication is to assist you in preparing financial statements for a bank or similar financial institution in accordance with ong>IFRSong>. It illustrates one

possible format for financial statements, based on a fictitious banking group involved in a range ong>ofong> general banking activities; the bank is not a first-time adopter ong>ofong>

ong>IFRSong>. This publication reflects ong>IFRSong>s in issue at September 1, 2006 that are required to be applied by an entity with an annual period beginning on January 1, 2006

(“currently effective” requirements) except that ong>IFRSong> 7 Financial Instruments: Disclosures and the amendment to IAS 1 Presentation ong>ofong> Financial Statements – Capital

Disclosures, which are effective for annual periods beginning on or after January 1, 2007, have been adopted early. Other ong>IFRSong>s that are effective for annual periods

beginning after1 January 2006 (“forthcoming” requirements) have not been adopted early in preparing these illustrative financial statements. This publication does

not illustrate ong>IFRSong> 4 Insurance Contracts, ong>IFRSong> 6 Exploration for and Evaluation ong>ofong> Mineral Resources or IAS 26 Accounting and Reporting by Retirement Benefit Plans,

or illustrate the disclosure requirements ong>ofong> a number ong>ofong> standards that are not specific to banking operations – these instances are highlighted throughout the

publication.

©2008 KPMG LLP, a U.S. limited liability partnership and a member firm ong>ofong> the KPMG network ong>ofong> independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

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KPMG Publications on ong>IFRSong>

First impressions: First Impressions: ong>IFRSong> 3 and FAS 141R Business Combinations (January 2008)

First Impressions is a publication that is prepared upon the release ong>ofong> a new standard, interpretation or other significant amendment to the requirements ong>ofong> ong>IFRSong>s. It

includes a discussion ong>ofong> the key elements ong>ofong> the new requirements and highlights areas that may result in a change ong>ofong> practice. Examples are provided to assist in

the assessment ong>ofong> implementation impact.

This edition considers the requirements ong>ofong> ong>IFRSong> 3 Business Combinations (2008) and the related amendments to IAS 27 Consolidated and Separate Financial

Statements(2008), issued by the IASB. This edition ong>ofong> First impressions also considers the requirements ong>ofong> FAS 141R Business Combinations and FAS 160

Accounting and Reporting ong>ofong> Noncontrolling Interests in Consolidated Financial Statements, issued by the FASB.

First impressions: ong>IFRSong> 8 Operating segments (July 2007)

First Impressions: ong>IFRSong> 8 Operating Segments considers the requirements ong>ofong> ong>IFRSong> 8 Operating Segments, which was published by the IASB on November 30, 2006.

ong>IFRSong> 8 introduces the “management approach” to segment reporting, which requires segment disclosure based on the components ong>ofong> the entity that management

monitors in making decisions about operating matters.

ong>IFRSong> 7 for corporates (December 2006)

This publication is intended as a supplement to the August 2006 edition ong>ofong> our publication Illustrative Financial Statements. Those illustrative financial

statements are based on an annual reporting date ong>ofong> December 31, 2006 and do not illustrate the requirements ong>ofong> ong>IFRSong> 7 Financial Instruments: Disclosures.

The purpose ong>ofong> this publication is to assist you in assessing the impact ong>ofong> ong>IFRSong> 7 on financial statements for annual periods beginning on or after January 1,

2007, the effective date ong>ofong> the standard. This publication is aimed at entities other than banks, insurance companies and other financial institutions, i.e., it is

intended for “corporates”. In addition, this publication illustrates the amendments to IAS 1 Presentation ong>ofong> Financial Statements in respect ong>ofong> capital

disclosures that were introduced at the same time as ong>IFRSong> 7 with the same effective date.

©2008 KPMG LLP, a U.S. limited liability partnership and a member firm ong>ofong> the KPMG network ong>ofong> independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

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KPMG ong>IFRSong> Institute

KPMG’s ong>IFRSong> Institute

KPMG’s ong>IFRSong> Institute provides information on recent news, insights, and events tailored to educate the participants on related ong>IFRSong>

topics.

https://www.kpmgifrsinstitute.com/Defaultong>IFRSong>.aspx

©2008 KPMG LLP, a U.S. limited liability partnership and a member firm ong>ofong> the KPMG network ong>ofong> independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

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KPMG Presenter

• Angela Carter

• Principal, KPMG LLP

• Mountain View, CA

• (650) 404-3056

• acarter@kpmg.com

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