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Creating an IFRS transition plan for project portfolios and project accounting

by Kent Bettisworth

February 15, 2011

The FASB and IASB are moving steadily forward with their plans to create a standardized set of corporate reporting guidelines (IFRS) and, there is not only a significant impact on business processes but also for your SAP systems. They must now accommodate an expanded project portfolio that includes leases, intangible development expenditures, and major overhaul costs. These new standards also alter procedures and policies for capital and revenue recognition accounting.

With this in mind, here is a tip for creating your IFRS transition plan for the project portfolios and project accounting business processes.

IFRS Transition Plan — Evaluation Phase

  • What is your company’s approach??
    • Business-wide, finance-focused, or top-side
  • Start your evaluation (4 - 6 weeks)
    • Identify the standards to evaluate
      • Acquire appropriate subject matter experts
    • Evaluate materiality
      • Assess the process change effect, including training requirements
      • Calculate the financial effect
      • Prioritize process and financial effects
      • Identify high effect, high priority processes and related systems
  •  Evaluate specific high priority process and system choices (4 - 6 weeks)
    • Identify process opportunities
    • Ident ify system solutions and alternatives
    • Prepare Level 3 conversion to IFRS project plan
    • Prepare estimate of work, duration, and resources for
      design phase
  • Integrate results with broader IFRS project plan and other initiatives
    Note: Total estimated duration is 8 - 12 weeks for the evaluation phase

 IFRS Transition Plan — Assessment Phase

  •  Key issues assessment (4 -5 weeks)
    • Evaluate specific process improvement options
    • Evaluate the system solutions
    • Process improvement options
      • Identify key master data, transactions, interface, and report requirements
      • Quantify the benefits
  •  System solutions assessment (6 - 11 weeks)
    • Confirm master data, transaction, interface, and report requirements
    • Identify solutions that best fit with strategic system
      architecture goal
  • Present the results
    • Decide which process improvements and system solutions
      to pursue
    • Prepare Level 4 “build and implement” project plan
  • Obtain approval to proceed
    Note: Estimated duration is 10 to 16 weeks for the process and systems assessment phase

To get more information on how IFRS affects project portfolios and project accounting, you can check out my presentation “Expert Guidance on the IFRS Effect on Project Portfolios and Project Accounting” or visit me at Ask the Experts during one of the evening receptions at the Financials 2011 event, March 8-11 in Las Vegas.

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