Do you know IFRS aka International Financial Reporting Standards is a set of accounting standards, similar to that you have US

GAPP.

IFRS is already adopted in more than 110 countries as of now and countries like Canada, Brazil, India, Korea and Japan is
planning for IFRS compliance by 2011. Check it out old post for details.

So what in inside

IFRS are standards and interpretations adopted by the International Accounting Standards Board (IASB).

IFRS are considered "principles based" set of standards in that they establish broad rules as well as dictating specific treatments.

International Financial Reporting Standards(IFRS) comprise:

 International Financial Reporting Standards (IFRS) - standards issued after 2001

 International Accounting Standards (IAS) - standards issued before 2001
 Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after
2001
 Standing Interpretations Committee (SIC) - issued before 2001
 There is also a Framework for the Preparation and Presentation of Financial Statements which describes some of the
principles underlying IFRS.

IFRS re-define in term of Accounting Principles

In simple equation

IFRS = Financial Reporting standards = Balance Definitions

that mean "disclosure Requirements" and "Balance Definitions ".

 US GAAP vs. IFRS - A difference

check out this post for some the key differences between these two.

Here is comparative study for IFRS on compliance issue.

Here is IFRS Standards and the underline Oracle mapped products

Oracle White paper

 EBusiness Suite Release 12 oriented white paper

IFRS will be one of the most significant enterprise-wide change initiatives facing finance over the next few years.IFRS adoption
not onky limited to accounting and financial reporting functions but it will also require changes across people, process and
technology.
 

o Oracle's Financial Management Solutions: Preparing U.S. Companies for the Transition to IFRS

o Managing the Transition to International Financial Reporting Standards

 Oracle Hyperion oriented white paper

o Oracle's Financial Management Solutions: Preparing U.S. Companies for the Transition to IFRS

These Oracle's white papers will help you in getting answer of these:

1. Options for implementing multi-GAAP accounting and eventually switching over to IFRS inyour financial (ERP) systems?
2. Exploring ledgers and business systems which contain the necessary reporting data, and, if not, what and which
processes required to capture and report new data?
3. Linking IFRS principles been incorporated into fore-casting and management reporting processes.

Two major Process in term of IFRS

1. Revalution : Check it out for definition here. This is still not comply with IAS30 and IFRS standard.Enhancement request
#4098044,is already registered with Oracle.
2. Translation : Check it out for definition here.GL translation is compliant with both US GAAP and IFRS standards.
Sometime back, I was talking to one of my accountant friend who pointed me some recent changes in IFRS ,and provided some
link for the awareness and to understand the impact in EBS suite. I am not going to put the details, rather will walk through
some information which is good to have with ERP consultant who is dealing with Financial products.

What is IFRS?

IFRS,International Financial Reporting Standards (IFRS), together with International Accounting Standards (IAS), are a
"principles-based " set of standards that establish broad rules rather than dictating specific accounting treatments. From 1973 to
2001, IAS were issued by the International Accounting Standards Committee (IASC). In April 2001 the International Accounting
Standards Board (IASB) adopted all IAS and began developing new standards called IFRS.

IFRS are used in many parts of the world, including the European Union, Hong Kong, Australia, Russia, South Africa, Singapore
and Pakistan. Nearly 100 countries currently require or permit the use of, or have a policy of convergence with, IFRSs. Here is
list of countries which adopted IFRS.

What is meant IFRS for Oracle eBusiness consultant/ERP Consultant?

As we are quite aware GAAP which is so called Generally Accepted Accounting P rinciples for Shareholder Reporting.The term is
not drafted by a legislature.

and ,in term of Accounting Principles this can be best understood as:

IFRS = Financial Reporting standards = Balance Definitions < /FONT >

which internally means more in term of "disclosure Requirements" and "Balance Definitions " for finance controller.

IFRS - What it is for?

The Other things IFRS would do is:

 Providing a bookkeeping rules rather many of us have impression that they have some rule set for accounting
  It will do Shareholder Reporting , and this is important when :
o A group of companies owned by a Public company
o Not the individual companies
 It will also do external reporting
o To your owners (investors, shareholders)
o Through their stock markets
 Management Reporting
o Maximize investors returns, measured only with IFRS
o Segment Reporting disclosure

IFRS - What it is not for?

And more important it should be understand that IFRS is not meant for:

 Statutory Reporting
 Tax Reporting
 Regulatory reporting
 Subsidiary reporting

IFRS – How new is it?

 IASB has been around since 1980’s

 IAS/IFRS pretty much converged with the Americans
 If your ERP supports US GAAP, it supports IAS/IFRS
 Key premises (recognition, measurement):
o Mark to Market when possible
o Reality of the Balance Sheet – real assets, real liabilities
o Income Statement analyses the change in wealth
o Deep Disclosure: owners right to know
 US GAAP vs. IFRS - A difference

While looking to some more information on internet ,I discovered a nice article from the site of Fulcrum Inquiry who pointed out
the key differences(adopted) between the two standards in there one of the article .

Don’t worry about your ERP Side

 Maybe requires some reconfiguration, maybe requires some data analysis

 We have notice there is some big change in R12 AR to meet revenue recognition, R12 is partially on track for IFRS fitness
in suite.
 The new R12 Global Architecture introduced the concept of ledgers which has capability of providing differing accounting
representations; one ledger for example could conform to IFRS, another to local GAAP.
  From the Currency area we have already noticed some big changes like:
o Balance level Translation or Remeasurement in Ledgers – within Ledger sets, run at one click
o Balance & Activity level Translation or Remeasurement in Financial Consolidation Hub
o Another is enhanced Revaluation [Functional Currency term dropped: conflicts with IAS 21 / FAS 52]

Those who are looking for some more insight about the changes suggested to refer white paper mention in the last.

Some more from Oracle blog

 IFRS Bandwagon heading for US? Are you ready to board?

Keep watching this space for having some more thoughts and insight for IFRS from Oracle .
WHAT IS IFRS? TABLE OF CONTENTS

IFRS - International Financial Reporting Standards are a series of What is IFRS? 1

accounting standards developed by the International Accounting
Standards Board (IASB), that is becoming the global standard for the SEC Timeline for Adoption 2
preparation of public company financial statements.
What are the New Standards? 3 -5
IFRS focuses on the standardization of financial reporting standards
IFRS and
across GAAP
international 6
borders. This standardized reporting practice
provides a uniform view of a corporations accounting statements.
US GAAP -vs- IFRS Similarities 7

As of 2011, approximately 120 countries currently require or permit

US GAAP -vs- IFRS Differences 8
IFRS reporting.
Convergence -vs- Compliance 9 - 10
The US Securities and Exchange Commission is weighing a five-year
work planEBS
IFRS and thatR12would lead to conversion of all US public companies
Examples 11 - 13
to IFRS. This is in response to global demand from regulators,
investors, businesses
The Centroid IFRS Teamand auditors for a single set of accounting
14
standards.
The Centroid Advantage 15
While support for maintaining
US GAAP remains strong in
the US, it is clear that
multinational corporations
or corporations that simply
do business internationally
will need to begin preparing
for IFRS one way or another.
WHAT ARE THE NEW STANDARDS? SEC TIMELINE FOR ADOPTION
Financial Statement Preparation Standards
The first standard refers to statement preparation; this includes the
format, content and layout of financial statements. For organizations
that generate financial statements out of their GL today, their current
ERP solutions have powerful statement generation tools, dual
accounting representations using Subledger Accounting (SLA) and
Business Intelligence (BI) tools to meet the IFRS reporting challenge.

2009 A limited group of large US Firms are permitted to use

Standard Area Covered Products
IFRS on an optional basis for fiscal periods ending on or
IAS 01 Financial Statements Hyperionafter December 15, 2009.
2011
IAS 27 Consolidate or Separate Financial
IAS 28 AssociatesThe SEC evaluates achievement of roadmap milestones
Management,
and decides whether to adopt a mandatory approach.
IAS 31 Joint Ventures Oracle General Ledger

Possible effective date for convergence

2011 -13 Interims
IAS 33
IAS 34 EPS
IAS 07 Cash Flow Statements
IFRS 03 Business Combinations

Accelerated filers begin filing in IFRS standard

2014
Features include:
Consolidation features (GCS), line aggregation, adjustment capability,
XBRL publication, cube management, “slice and dice.”
Possible adoption start date
2015

Non-accelerated filers begin filing in IFRS standard

2016
Complete adoption
2018
WHAT ARE THE NEW STANDARDS? WHAT ARE THE NEW STANDARDS?
Detailed Transaction Standards IFRS Consolidation Standards
The last set of standards often require detailed transaction data to The next set of standards focuses on professional-level accounting
be summarized and reported correctly, which means capturing this and consolidation practices where corporations handle specific
data in the subsystems. Oracle’s ERP solutions will provide specialized situations; for example - merger and acquisition activity, foreign
industry products and subledger solutions for service consumers. currency translations, etc. and/or specific high-level transactions (e.g.,
Specific compliance and features are constructed with the IFRS government grants, discontinued businesses, etc.). Organizations can
Statement in mind. chose to use Oracle’s EPM solutions to facilitate modeling corporate
adjustments before pushing them down to the ERP General Ledger.
Standard Area Covered Products
Also, all of Oracle’s ERP solutions contain many powerful general
IASaccounting
41 features in each of its GeneralSpecialized
Agriculture Ledgers. industry
IAS 32 FI: Presentation products and
IAS 39 FI: Recognition, Measurement subledger solutions
IFRS 07 Financial Instruments for service consumers
IFRS 04 Insurance Contracts
Specific compliance and features constructed with the IFRS statement.
Standard Area Covered Products
IAS 10 Post Balance Sheet Hyperion
IAS 20 Government Grants Financial
IAS 21 Foreign Currency Management,
IAS 29 Hyperinflation Oracle General
IAS 36 Impairment Ledger Standard Area Covered Products
IAS 37 Provisions & Contingencies IAS 02 Inventories Specialized subledger
IAS 38 Intangibles IAS 11 Construction Projects solutions: Projects, Fixed
IAS 40 Investment Property IAS 16 PP&E Assets, CRM, Order
IFRS 01 First Time Adoption IAS 17 Leases Management and revenue
IFRS 05 Discontinued, Held for Sales IAS 18 Revenue recognition in AR,
IFRS 06 Mineral Resources IAS 19 Employee Benefits Procurement and AP,
IFRS 08 Operating Segments IAS 23 Borrowing Costs Inventory and Costing
Features include:
Tracks data required by the specific statement, such as revenue
Flexfields, segments and other chart of accounts features, translation recognition in receivable, costing methods in inventory, etc.
(or remeasurement) multiple ledgers and accounting engines. Model
Corporate Adjustments.
US GAAP -VS- IFRS SIMILARITIES IFRS AND GAAP
There are quite a few similarities between IFRS and US GAAP
because the convergence project between IASB and FASB (the
US GAAP: 25,000 Pages IFRS: 2,500 Pages
standard setters responsible for IFRS and US GAAP respectively) has
been going on for a while (since 2003 actually).

Approach (some examples) IFRS US GAAP

Revenue Recognition  
Fair Market (e.g. AR or inventory valuation)  
Detailed Disclosure  
Segment Reporting  
Chart of Accounts Not Mandated  
Distinction Between Tax &
External Reporting  
For example, both IFRS and US GAAP have the same rules around
revenue recognition. German GAAP on the other hand does not
have revenue recognition; instead an organization would book sales
invoices directly.
US GAAP is rules-based, meaning that there are very specific
“If/Then” pronouncements. IFRS is principles-based, so there is
greater dependency on judgement. IFRS is also more vague in how
companies adopt or implement those standards.
CONVERGENCE -VS- COMPLIANCE US GAAP -VS- IFRS DIFFERENCES
There are 2 main approaches to IFRS adoption:
Approach (some examples) IFRS US GAAP
Convergence: Fixed Assets Only Certain
Fair Market Revaluation & Investments Fixed Assets
- Restructure existing applications so the primary ledgers reflect
Extraordinary Items None Rare (negative goodwill)
the standards set forth in IFRS.
Consolidation Control 2 Models

Joint Ventures Proportional OK Only Equity

US GAAP
Ledger Set
Research & Development Capitalized Expensed Reporting

Inventory No LIFO LIFO OK

1 Step, 2 Step,
Impairment
Reversible No Reversal IFRS Primary Ledger Secondary Ledger
Reporting
Some specific differences between the two
IFRS Accounting standards include:
US GAAP Accounting
- Fair Market Revaluation - Under IFRS, organizations must revalue
fixed assets. Under US GAAP, only certain assets like real estate
must be revalued. SLA SLA
- Extraordinary Items - Negative goodwill has gone away under IFRS.
- Consolidation - Only entities that are under your control should
be consolidated underAPIFRS. AR FA CST
- Research and Development - Development costs are placed in the
Balance Sheet under IFRS.
Subledgers
- Inventory - IFRS does not allow LIFO or “Last In First Out.” There
Transactions are particular tax advantages to LIFO, so that is why firms practice
it. But under IFRS, LIFO is not allowed because inventory in the
Balance Sheet is not quite reflective of actual cost.
IFRS AND EBS R12 EXAMPLES CONVERGENCE -VS- COMPLIANCE
Compliance:
Inventory - IAS 02
- Maintain current accounting practices per US GAAP guidelines
IFRS - GAAPand then build a secondary
Differences ledger toApproach
E-Business reflect thewith
standards
R12 set
forth in IFRS.
Inventory Costing SCM products like Oracle
US GAAP - Allowable costing methods Inventory handle Inventory,
include LIFO, FIFO and Average Cost Costing
- They do all the IFRS options
IFRS - LIFO not allowed
- Actual w/flavors: landed, period
Inventory Valuation actual, etc.
IFRS US GAAP - Inventory is valued at the - Standard w/flavors: process,
Ledger Set
Reporting lower of cost or market, and cannot BOM, semiconductors
be written up at a subsequent date - And variances to actual
IFRS - Inventory is valued at the - Rev dates & Inventory Aging
lower of cost or net realizable value: - Reconfigure LIFO to standard
if the net realizable value of an item or actual
US GAAP Primary Ledger Secondary Ledger - Use a second IO for dual costing
that has been written down
Reporting increases subsequently, then the
US GAAP Accounting IFRS Accounting write-down is reversed under IFRS

Asset Componentization - IAS 16

SLA SLA

IFRS - GAAP Differences E-Business Approach with R12

Assets
US GAAP - Component accounting
AP AR FA CST is permitted, usually assets are - Componentized assets with
depreciated as a whole different useful lives
- Parent Child features
IFRS - Component accounting is
Subledgers - Grouping features (restricted
required
revaluation support)
Transactions - API (to import the real estate
& assessor’s valuation)
- Asset revaluation
IFRS AND EBS R12 EXAMPLES
Operating Segments - IFRS 08
IFRS - GAAP Differences
Impairment, specifically Fixed
Assets
US GAAP
- Based on fair value
- Non-reversible
IFRS
- Based on the recoverable
amount (the higher of the
asset’s value-in-use and fair
value less costs to sell)
- Reversible
Foreign Currency - IAS 21
IFRS - GAAP Differences
E-Business Approach with R12
Assets
- API to accumulate and contrast
recoverable values
- API processes losses automatically
and executes all immediate and
long-term accounting
- Automated comparison and
impairment accounting
- Automatically process the losses
- Automatically execute all the
immediate and long-term
accounting
E-Business Approach with R12
IFRS AND EBS R12 EXAMPLES
IFRS - GAAP Differences
Identifying Operating Segments
US GAAP - Segments are based on
actual Management Reporting.
(excludes intangible assets)
IFRS - Operating segments are
identified by Risk and reward.
(includes intangible assets)
IFRS - GAAP Differences
IFRS and GAAP determine
Functional Currency using
different emphasis
US GAAP - Cash Flow Based
IFRS - Factors based with more
emphasis on pricing factors.
Both FAS 52 and IAS 21 specify:
- Remeasurement (Historic Rate
Conversion) from Accounting
to Functional Currency
- And Translation (Current Rate
Conversion) from Functional
to Reporting Currency
Impairment - IAS 36
E-Business Approach with R12
General and Subledger
- Use our very flexible chart of
accounts design to track and
identify different operating
segments
- Reporting features like FSG with BI
Publisher
E-Business Approach with R12
General and Subledgers
- Reporting Currencies and
RevaluationIntangible Assets
work together to - IAS 38
provide both Remeasurement or
Translation
- Chose the level of detail per your
business needs:
- The Subledger Transaction
Level
- Or the General Ledger Activity
Level
- Or the General Ledger Balance
Level
- Can also be done in HFM
Development Costs
US GAAP - Development costs are
generally expensed as incurred
IFRS - Development costs (directly
attributable expenditure) are
capitalized when certain criteria
are met
GL and Project features deploy for
Capitalized Development
- GL Cost Centers with Balance Sheet
accounts capture the costs
- Allocate to P&L when time to
release
OR
- Project Accounting stores Projects
on the Balance Sheet
- Release to P&L via BOM &
inventory
- Integration with costing
- Direct release to P&L via Project
Accounting
- Project Time & Costs features
THE CENTROID ADVANTAGE
We provide the solutions you need for increased performance -
maximizing your investments - guaranteed.
We believe high performers push the envelope, outperforming their
competition. As a high-performing organization, we take full
responsibility for our work and the potential risks involved. Quite
simply, we always deliver on our promises.
As an experienced leader in Oracle consulting, we offer a broad
range of services that give you an array of industry experience and
proven performance. From sophisticated customer management and
integrated supply chain solutions, to the transformation of your
business and internal functions, we have the expertise to get the job
done and get it right the first time.
We are focused on providing you with comprehensive solutions -
whatever your needs may be. From infrastructure optimization,
technology deployments to application configuration and support, we
believe in using the best industry-honed talent to provide you with a
value-added solution.
Our first customer is still with us after 15 years.
Centroid’s relentless pursuit of providing the
best solutions to our clients is a
testament to our success and yours.
Call us today and see how we
can FutureProof your
technology and business.
THE CENTROID IFRS TEAM
Centroid's Applications and Industry consultants are a focused team
dedicated to working with our clients to help guide them on the path
to achieving IFRS compliance. We work with our clients to identify
the most optimal approach between GAAP to IFRS convergence, or
complete IFRS Adoption.
Using an established portfolio of common accounting and reporting
changes for IFRS, we're able to establish a framework for transiting
in an expedient manner. Oracle E-Business Suite Release 12 enables
clients to take full advantage of Oracle R12's multiple ledger
functionality. With the introduction of Subledger Accounting (SLA)
in R12, customers now have the ability to translate their ledgers into
an IFRS compliant set of accounting entries.
We continually survey over 2,000 finance executives to gauge their
concerns/progress regarding IFRS. Our results along with industry
updates are reviewed on a quarterly basis on Centroid’s IFRS
Webinar series. For more details on the IFRS survey and our Webinar
series, go to www.centroid.com or feel free to contact us.
 US GAAP IFRS Impact

Companies that use LIFO must

Permits LIFO, FIFO, weighted average cost, or
Inventory
specific identification. Inventory carried at
Valuation
lower of cost or market.
Permits FIFO or weighted average cost; LIFO
revalue inventory, which could result
not permitted. Inventory carried at lower of
in major tax liabilities due to the
cost or net realizable value.
IRS’s LIFO conformity rule.

Asset Write-downs are more likely under

Two-step impairment. Single-step impairment.
Impairment IFRS.

Allows upward revaluation when an active

Assets can be written down, but not written Book values are likely to increase
Asset Valuation market exists for intangibles; allows
up. PP&E is valued at historical cost. under IFRS.
revaluation of PP&E to fair value.

Provides very specific general and industry

Not specific about the timing and
Revenue guidance about what constitutes revenue, Revenues are likely to increase with
measurement of recognition; lacks industry-
Recognition how revenue should be measured, and the less detailed guidance.
specific guidance.
effect of timing on recognition.

Can limit disclosure of contingent liabilities if

Contingencies Contingent liabilities must be disclosed. May result in fewer disclosures.
severely prejudicial to an entity’s position.

Debt covenants may need to be

Permits curing debt covenant violations after Debt covenant violations must be cured by
Debt Covenants amended, resulting in related
fiscal year end. fiscal year end.
transaction costs.

Research & Development costs will be deferred

R&D costs must be expensed. Allows capitalization of R&D costs.
Development and amortized.
 Entity Consolidation is based on who has the Consolidation is based on which entity has Companies are likely to consolidate
Consolidation controlling financial interest. the power to control. more entities.

Allows certain securitized assets and liabilities IFRS requires most securitized assets and May result in very different balance
Securitization
to remain off a corporation’s books. liabilities to be placed on the balance sheet. sheet values.

Financial Fair value based on a negotiated price Several fair value measurements. Fair value
Financial assets and liabilities will be
Instrument between a willing buyer and seller; not based generally seen as the price at which an asset
measured differently.
Valuation on entry price. could be exchanged.

Methods allowed: straight-line, units of
production, or accelerated methods (sum of
Depreciation
digits or declining balance). Component
depreciation allowed but not commonly used.
Allows straight-line, units of production, and Assets with different components
both accelerated methods. Component will have differing depreciation
depreciation required when asset schedules, which may increase or
components have different benefit patterns. decrease assets and revenue.

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- See more at: http://post.nyssa.org/nyssa-news/2010/04/current-major-differences-between-ifrs-and-us-gaap.html#sthash.oTYSjp9s.dpuf