So how does IFRS impact my technology?
On our last blogs we chatted about who IFRS would impact in your organization and how you can start to get ahead of the herd in rolling out the new standards. Today we’ll look at how your technology systems are likely to be impacted.
There are two basic approaches to implementing IFRS in an SAP environment. You can’t simply convert from GAAP to IFRS as a cut over due to the need for duel reporting means that for a couple of years you’ll need to report both standards. So the approaches come down to:
• Enter topside adjustments at the end of each period to translate your current GAAP books into an IFRS standard. This is typically performed in your consolidation system
• Develop and run a parallel ledger that captures and translates transactions into both GAAP and IFRS
In the first case this means having a consolidation system that can handle the topside entries and reporting multiple reporting standards. This could easily mean upgrading your existing solution or implementing a new one, especially if you are on an old package or custom built solution. With SAP Business Planning and Consolidation (BPC) now available in its Netweaver version, there is no reason that the way to approach this isn’t ‘Why not BPC?’ right?
The challenges with this approach are that it requires manual steps and is prone to error, as many European organizations have found out to their cost.
A more robust way to approach the problem is to create a parallel ledger for IFRS postings and reclassify transactions as they are posted to reflect both GAAP in one ledger and IFRS in another. This could be achieved in the older special ledger functionality or in the new GL. However, if you build the solution in Special Ledger it would be thrown away and you would have to reimplement when you move to the newest versions of SAP’s Enterprise Core Component (ECC).
How are you planning on implementing IFRS?