Conversion Approach
Each phase of the IFRS conversion reflects a comprehensive set of activities to
be considered and acted upon.
Accounting Policy Assessment and Determination for Opening Balance Sheet*
10 – 12 weeks
Phase I
Assess
• IFRS eligibility status*
• IFRS adoption/deployment
options
• Data gathering needs
• Key accounting and tax
policy differences*
• Current state systems,
interfaces, and reporting
capabilities
• Supporting business
processes
• Organizational change
readiness
• Existing employee skills set
and training needs
• Key stakeholder needs
• Employee compensation tied
to performance metrics
• Internal and external
communications needs
• Executive leadership support
• Long-term contracts
Change Management (communication, training, user readiness, sponsorship)
Legend
3 – 6 months = Project Checkpoint
Phase II
Plan and Design
10 – 12 months * = Accounting Firm Activity
Phase III
Build and Test
• IFRS adoption strategy TBD
• IFRS deployment plan
• Accounting policy • Accounting systems and data Phase IV
revisions* conversion Deploy
• Internal accounting • Financial reporting and
internal accounting controls
controls* • Supporting business • Accounting and sub-systems
• Technical architecture processes per deployment strategy
design for GAAP to IFRS • Financial statement
strategy • Internal controls*
restatement* • Business processes to
• Common IFRS data model
• Business process • Regulatory and statutory locations
changes based on new reporting (finance & tax) • Regulatory reporting
requirements • Organizational structure and capability
• Internal/external performance measurement • Performance measurement
system targets
communication strategy
• Employee performance • 3rd party contracts to • Organizational structure
correspond with new
metrics aligned with IFRS • IFRS compliant financial
reporting metrics
• Training program statements*
• Training, work-shadowing,
• Ongoing IFRS compliance
and skills assessment* • Footnote and disclosures*
plan*
• Communications
Program and Journey Managementplan • IFRS compliance updates*
Key Impact areas

Impact due to IFRS implementation varies based on the GAAP which is

presently being followed. Some of the commonly noticed key impact areas are

Property, Accounting
Impairment Intangible Inventory Revenue
Plant & for Financial
of Assets Assets Valuation Recognition
Equipment Instruments
Key Impact Areas –
Impairment of Assets (IAS
36)
Situation
Current
under Carrying value
Situation
Cash Flows from IFRS versus the “Fair
asset determine Value” of the
the need for asset determine
impairment the need for
impairment

Impairment IFRS allows

losses cannot be impairment losses
revised or to be reversed or
reversed revised

SAP Solution

Recording
Create a
and Use
separate Integration
reporting of “Investment
depreciation with parallel
Impairment Support”
area to track GAAP
separately functionality
impairments accounting.
from original in SAP
to assets.
APC
Multiple Solutions available for
IFRS Accounting
There are 4 key implementation options available when adopting
IFRS
Option 1: Additional Company Code (Classic GL)
 An additional company code as well as accounts are created to capture IFRS postings
 One or more special purpose ledgers may be required
 Additional configuration is required to support foreign exchange valuations, new financial
statement versions, asset accounting, etc.
Option 2: Parallel Accounting with Special Purpose Ledger (Classic GL)
 One or more special purpose ledgers are required
 Additional accounts are created to capture IFRS postings
Option 3: Parallel Accounting with Additional Accounts (Classic GL)
 Additional accounts are created to capture IFRS postings
 A set of common accounts, US GAAP accounts, local GAAP accounts, as well as IFRS
accounts will be setup and maintained
Option 4: Parallel Ledger (New GL)
 A separate ledger will be created in order to capture IFRS postings and maintain a
complete set of IFRS books
 The IFRS ledger is posted to in parallel with US GAAP and other regulatory ledgers
New G/L Solution for
Parallel Accounting
SAP’s New General Ledger Accounting enables the use of Parallel Ledger
accounting as a method to achieve Multi-GAAP accounting
New General Ledger  Postings via new
transactions

Only Specified Ledgers are Updated

All Ledgers Updated Simultaneously

FB01L and FB50L

0L Leading Ledger
FI-AR
FI-AP
… Non Leading Ledger
SD  Foreign currency
MM Valuation Program
PP Non Leading Ledger FAGL_FC_VALUA
TION
PM
…
 FI-AA depreciation
Other Non Leading Ledgers areas

IFRS, US GAAP, Local GAAP

Reports are based on the
corresponding ledger
Summary

 IFRS is an Accounting Framework that is fast getting mandated by

countries around the world.

 Deploying IFRS has challenges as well as opportunities to improve

the accounting process.

 There are a number of IFRS requirements, solutions for which will

need to be built into SAP systems.

 SAP provides a number of options to deal with Parallel Accounting,

including Parallel Ledgers which is introduced in the ECC versions.

 Unique transition challenges are likely to be faced by customers

(especially in US). The transition to IFRS is an important project and
needs to be planned out well in advance.