Guessing the Costs of IFRS Conversion

Guessing the Costs of IFRS Conversion - 3/30/2009

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HEADLINE NEWS:

Guessing the Costs of IFRS Conversion, U.S. companies believe they will spend more than European ones did to adopt the global rules, according to an Accenture survey.
Sarah Johnson

cfo.com. March 30, 2009
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EXCERPT: U.S. executives expect to pay more than their European counterparts did to convert to International Financial Reporting Standards. Depending on company size, they estimate they'll spend between 0.1% and 0.7% of annual revenue to move from U.S. GAAP to the global rules, an endeavor publicly traded companies in Europe undertook four years ago at an average cost of 0.05% of revenue. The predictions are in a report to be released tomorrow by consultancy Accenture, which in December surveyed 208 executives at U.S. companies with revenues above $1 billion (more than three-fourths of respondents have finance-related titles and work at companies with more than $5 billion in revenue). Not only do they expect to pay more than the Europeans did, but many believe they will be on the hook for substantially more than the 0.125% to 0.13% of revenue that the Securities and Exchange Commission has pegged as the average for U.S. companies. In its proposed plan to move all U.S. publicly traded companies to the global standards, the SEC also predicted that the largest U.S. registrants that adopt IFRS early would incur about $32 million in additional costs for their first IFRS-prepared annual reports. The most widely used metric for the expenses incurred in Europe came from the Institute of Chartered Accountants in England and Wales back in 2005, after European Union companies switched from their home-country GAAPs to IFRS. Those with revenue between 500 million Euros and 5 billion Euros spent 0.05 percent of their revenue in their first year of transitioning to IFRS.

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