IFRS in three years possible ... but only with a stable platform.

• Author: Heffes, Ellen M.
• Position: Financial reporting - International Financial Reporting Standards

This month--April 20 to be exact--marks the comment period deadline for the U.S. Securities and Exchange Commission's Roadmap for the Potential Use of Financial Statements Prepared in Accordance with International Financial Reporting Standards by U.S. Issuers.

The timing of this roadmap will have a profound impact on the finance profession. And, professionals are closely watching to see how the economic crisis as well as the new SEC leadership and presidential administration will affect its ultimate timeline.

Mandatory adoption dates proposed by the SEC range from 2014 to 2016, depending on a firm's accelerated or nonaccelerated filing status. But, even if those dates are extended, many believe it's still a matter of when, and not if.

With this in mind, Cheryl Graziano, vice president-Operations, Financial Executives Research Foundation and Ellen Heffes, editor-in-chief, Financial Executive, spoke with two practitioners from European-based companies that have already implemented IFRS to share insights for U.S. peers.

Martin Wheatcroft is U.S. controller of National Grid, an international energy-delivery company and the largest distributor of natural gas in the northeastern U.S. as well as one of the largest investorowned energy companies (revenues in excess of $20 billion). In his previous role, as chief accountant in the firm's London headquarters, Wheatcroft oversaw the company's IFRS adoption in 2005.

German-based Deutsche Telekom, a global telecommunications company with revenues of 61.7 billion euros (equivalent to approximately USD 78 billion), went through a similar transition in 2005.

According to Michael Bruecks, vice president Principles, Policies and Research, Group Accounting and Controlling, Deutsche Telekom's board of management commissioned group accounting and reporting in October 2002 to conduct a pre-project on the conversion to IFRS, together with the divisions.

This pre-project was successfully completed in March 2003 and the main project began in April 2003.

Since Deutsche Telekom was obliged to report under IFRS from Jan. 1, 2005, the company chose to present its IFRS opening balance sheet as of Jan. 1, 2003. Additionally, to be able to use several standards parallel for a number of years, IFRS was introduced at the accounting voucher level.

Both National Grid's and Deutsche Telekom's projects were led by the Finance function. Wheatcroft led IFRS conversion efforts on a day-to-day basis, reporting to the group financial director and group financial controller, who were both also involved throughout the process. In turn, business-wide lead accountants in specific areas (e.g. energy, derivatives) were actively involved and reported progress to him.

The team, he explains, had two major parts--a core team led by financial reporting to lead process issues and another group focused on what process issues would impact how the company was managed. Groups such as investor relations, human resources and in-house legal counsel were also involved, and the company's external auditor was a "critical part of the process."

Similarly, at the beginning of 2004, Bruecks says that Deutsche Telekom's organization of the IFRS project was brought more closely into line with the requirements for the live transition the following year. "The main feature of this new organization was the even stronger integration of the project activities into the organization of group accounting and reporting," he says.

The project's steering committee comprised the chief financial officer, the...