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International Financial Reporting Standards - Will the Transition from GAAP to IFRS Affect Your U.S.-based Company?

by Frank Hamelly
Senior Consultant, I.B.I.S., Inc.,

Major accounting changes are coming to the U.S. as generally accepted accounting principles (GAAP) and international financial reporting standards (IFRS) converge in the next several years.  And the impact should concern more than just accountants. A change of this magnitude will impact analysis models, accounting software, and training.  Companies of all sizes, but especially publicly-held companies who will see the changes first, need to understand that using a different accounting method can create different financial results and, potentially, increased tax liabilities.

There are two projects going on simultaneously.  The first one is the move to IFRS. The second is a draft of a new statement presentation format.  The change in statement presentation format will probably happen sooner than the change to IFRS, but both of these changes demand attention because they will affect everything we do in analyzing financial statements.

And if you are a Microsoft Dynamics GP customer, it will also be important to understand whether your version can support the coming IFRS requirements.

The New Statement Presentation Format

The presentation format of the financial statement will include the following changes:

  • The balance sheet, income statement, and cash flows each will be divided into five sections: business, discontinued operations, financing, income taxes, and equity.
  • A fourth statement will reconcile the statements of comprehensive income and cash flows.
  • The business section of each statement will be further divided into operating and investing assets and liabilities, income, and cash flows.

Where accounts are placed will be based on where management believes they should fall.  The operating section will have anything that's integral to the company's business.  The investing section ...

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About Frank Hamelly

Frank Hamelly, Sr. Dynamics Consultant with I.B.I.S., Inc., in Charlotte, NC,  is a business and technology professional with over 25 years experience implementing and supporting various ERP systems and business process re-engineering initiatives across all organizational areas and across various industries, for small, mid-sized, and Fortune 500 companies.  He has held numerous positions in Accounting, Finance, Customer Service and Information Systems.  His application experience includes SAP R/3, Baan, Fourth Shift, Peachtree, MAS 90/200, Quickbooks and Microsoft Dynamics ERP.  His industry experience includes manufacturing, , distribution, telecom, aerospace, life sciences, utilities and media.  Frank studied Business Administration with an Accounting concentration at the University of Pittsburgh.  He is a Microsoft Certified Professional (MCP), Microsoft Certified IT Professional (MCITP), a Microsoft Certified Trainer (MCT), and has been named a Microsoft Most Valuable Professional (MVP) each year since 2008.  He writes articles for Dynamics-related web sites and is a regular speaker at Microsoft Dynamics Convergence, GPUG Summit, MSDynamicsWorld's Decisions Virtual Conference, a trainer and presenter for the Great Plains Users Group (GPUG) and has been a reviewer for various books written by fellow MVPs.  Frank is author of the blog GP2themax with 5,000 visits per month.

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