Financial executives have always needed to be potetalccounting changes. Now, the accelerated scope and pace of proposed changes toward convergence of accounting standards globally has increased the importance of understanding not only the technical details, but also a broad spectrum of implementation requirements and business and technology implications of what could be an unprecedented amount of accounting change.
Today's dynamic regulatory environment, coupled with a sharper focus on accounting, will result in an increasing amount of change and demand for accompanying guidance in the areas of accounting, reporting and auditing.
For example, despite the fact that the recently published final SEC staff report on the International Financial Reporting Standards (IFRS) roadmap does not contain any recommendations for incorporation of IFRS for U.S. registrants and the timing of the U.S. Securities and Exchange Commission (SEC) action is unclear, the Financial Accounting Standards Board (FASB) is continuing to move forward with accounting convergence. This delay in U.S. adoption of IFRS for domestic SEC registrants does not mean that the rate or pace of accounting change will subside.
In fact, it is likely that the pace of accounting change will accelerate over the next few years as FASB and the International Accounting Standards Board (IASB) jointly finalize many of the convergence standards they have been working on. For example, FASB and IASB expect to finalize the new revenue recognition standard in the next six months, as well as continue to work together on several other standards. These include leasing, financial instruments and insurance contracts all of which could have a significant impact on current accounting and reporting requirements under U.S. generally accepted accounting principles (U.S. GAAP).
In addition to accounting convergence, some companies may need to revise their business models to adapt to changes in technology and the accounting requirements. As a result, a variety of constituents, including investors, regulators, customers and suppliers, may also be impacted by changes in company business models
Beyond Accounting Change
Accounting change often requires adjustments to systems, processes, internal controls, business practices and contractual arrangements and an effective financial executive will want to take all of these factors into consideration when analyzing the effects of an accounting change on his or her organization. Leading financial executives should develop and maintain effective management processes to analyze and implement new standards and address the related issues such changes will require.
As illustrated below, there are a number of important matters outside of analyzing the technical accounting issues that financial executives should consider related to a significant accounting change.
* ENSURE THAT THE COMPANY HAS GOOD RADAR.
It is important that financial executives are kept up to speed with major accounting changes that are being contemplated and consider how proposed changes could...