First known as International Accounting The SEC’s current milestones are: A major consideration, even given a
Standards (IAS), International Financial firm set of dates, will be how the merg-
Reporting Standards (IFRS) were devel- 1. Improvements in accounting stan- ing IFRS and U.S. and Canadian GAAP
oped by the International Accounting dards (such as IFRS) standards will each be amended over
Standards (IAS) Committee beginning 2. Funding and accountability of the time. Several presently known examples
in 1973. In 2001, the standards were International Accounting Standards are listed in this paper, but many more
certified by the International Accounting Committee Foundation will undoubtedly appear. This suggests
Standards Board (IASB) and formally 3. Improvement in the ability to use that companies will want to prepare
adopted by the European Union as its interactive data (such as Extensible parallel sets of consolidated financial
single financial reporting standard. Business Reporting Language, or statements to minimize unforeseen dis-
Since then, in addition to taking effect XBRL) for IFRS reporting ruptions to their businesses’ reported
throughout Europe, IFRS has become 4. Education and training on IFRS in the financial picture. However, the effort
the accepted reporting standard in over United States to maintain two sets of books for an
100 countries and is the single accepted 5. Limited early use by eligible entities. undetermined period of time is not
standard in 85 of them, including Hong This milestone would give certain insignificant.
Kong, Singapore, Malaysia, Australia, U.S. issuers the option of using IFRS
Pakistan, India, the Gulf Cooperation for fiscal years ending on or after These aggressive commitments will
Council of Arab States, Russia, and December 15, 2009. have a fundamental impact on all North
South Africa. 6. Anticipated timing of future rule mak- American companies, large and small.
ing by the SEC. On the basis of the The extensive tax, income, and balance
The 2002 “Norwalk Agreement” progress of milestones 1 through 4 sheet consequences must be studied
between the IASB and the U.S. Financial and the experience gained from mile- carefully and plans implemented to
Accounting Standards Board (FASB) has stone 5, the SEC will determine in enable a smooth reporting transition
led to a commitment that FASB rules 2011 whether to require mandatory that does not distort the financial posi-
and IFRS standards will be made fully adoption of IFRS for all U.S. issuers. tion of a company upon first report under
compatible. The Canadian Accounting If so, the SEC will determine the date the new standards. Clearly, both short
Standards Board has already adopted a and approach for a mandatory transi- and long term, organizations, processes,
timetable for convergence, and Canadian tion to IFRS. Potentially, the option to and IT systems must change.
companies will be required to comply use IFRS when filing could be expand-
by 2011. Based on continuing conver- ed to other issuers before 2014. To cope with the systemic demands
gence, the U.S. SEC has announced 7. Potential implementation of mandato- the new standards will impose, and to
that U.S. companies will be allowed to ry use. The proposed road map will avoid unpleasant surprises, companies
report under these new standards as raise many questions, including must prepare their infrastructures for
early as 2009, and compliance for all whether the 2014 transition date to this change in advance. SAP can help
U.S. companies could be required by IFRS should be sequenced. The road by providing software that already
2014 assuming certain project mile- map envisions a transition approach, meets the new requirements – and by
stones are met. where large accelerated filers could delivering the software with the tools,
be required to comply in 2014, then training, and consulting needed to iden-
accelerated filers in 2015, and non- tify risks, threats, and opportunities
accelerated filers in 2016. related to the regulations, thereby
easing the burdens of the transition.
1 Information on International Financial Reporting Standards (IFRS) regulations contained in this paper is taken directly from International Accounting
Standards and IFRS documents produced by the International Accounting Standards Board (see www.iasb.org). However, these citations and interpreta-
tions are both subjective and subject to change as the regulations are updated. Information here should not be relied upon in place of sound analysis by
a well-qualified and certified accountant, as well as a thorough review by your auditing firm.
4
Moving to a Single
International Standard
Challenges and Opportunities
5
Much More than a Reporting Project
A Chance to Reevaluate Accounting
Functions
6
Understanding that IFRS requires both • Long-term construction contracts In the fiscally oriented financial reporting
accounting and reporting changes is (such as percentage-of-completion systems of North America, published
also important for correctly gauging methods) corporate reports and related financial
the time and resources it will take to • Intangible assets (such as in-house statements have generally played a lim-
successfully complete the implementa- computer software and patents) ited role in company decision making.
tion project. IFRS disclosure and trans- • Financial instruments and hedge As a result, internal reporting has tradi-
parency requirements not only extend accounting tionally been separate from external
beyond present reporting obligations reporting – both in terms of the data
of U.S. and Canadian GAAP standards, The requirement for more and different involved and sometimes even the organi-
(for example, the new “Notes” state- information may necessitate new pro- zations producing that data. The intro-
ment), they also introduce “opportuni- cesses for closing a reporting period. duction of IFRS reporting should encour-
ties” for data collection and testing that Companies will have to make sure that age companies to reevaluate their
carry potential for making compliance their monthly, quarterly, and annual managerial and financial accounting
an extensive endeavor, even after the closing procedures produce all of the functions. In many cases, the introduc-
period of parallel running is complete. required information and deliver that tion of IFRS may give companies an
To meet all the new requirements, orga- information on time. The use of IFRS opportunity to simplify their operations
nizations must be prepared to augment to harmonize internal and external in this regard. It can also help them
their existing reporting procedures and reporting may lead to organizational reduce costs by synchronizing the areas
collect all necessary information in the changes that require previously auto involved and providing a single set of
proper context and under the proper nomous departments to work more numbers for both internal and external
accounting treatment. Such preparation closely together. decision makers – including managers,
is especially important in areas such as: shareholders, creditors, and analysts.
8
Assessing the Scope of
Accounting Changes
Where Will IFRS Regulations Have Impact?
Because the adoption of IFRS can mented quickly and successfully so that tions, but they will have a significant
mean significant changes in the philo companies can begin their planning for impact on the tax, balance sheet, and
sophy and process of financial report- this important accounting conversion. revenue analysis for potential mergers,
ing, it is imperative that companies ob- acquisitions, and divestitures. Senior
tain adequate knowledge of what IFRS The following are major subject areas executives engaged in business-to-
involves and what kind of changes they where new regulations can have an im- business ownership negotiations will
can expect. pact on operations and record keeping, need systems that enable accurate
as well as on their underlying IT support assessments of these impacts in addi-
The first step in any IFRS project is to systems. tion to other customary due diligence
determine how the accounting rules on cash flows and profitability. Acquirers
in current use differ from those under Acquisition Accounting, Joint who are adept at effective valuation and
IFRS. This entails analyzing individual Ventures, and Goodwill financial impact analysis will carry a
financial statement positions to identify competitive advantage in their markets.
where IFRS rules require different valu- Issue: In situations where control of one
ation procedures and then pinpointing or more businesses is acquired or com- Recommended approach with SAP
the information and entries needed to bined, IFRS requires the identification software: Analytical applications for
achieve the new valuations. Also critical of an acquirer and measurement of fair business planning and consolidation, as
is the analysis of how those new entries value (IFRS 3.17). Recent 2008 IFRS well as all supporting financial analytics,
and valuations will impact financial scope changes further require that will become increasingly important in
statements. When options for compli- combinations of mutual entities without any mergers and acquisitions scenario.
ance exist, a clear understanding of consideration (such as dual-listed shares) A reliable and flexible model of existing
both the costs as well as the benefits are also covered by this regulation. business operations will always be
of different approaches to compliance Measurement of these acquired busi- desired as a starting point. Data transla-
will be critical in making the best, most nesses must be by the IFRS “acquisition tion and input tools, for merging what-if
profitable decisions in achieving IFRS method,” including identification of any scenario data from candidate organiza-
compliance. Below are just some of noncontrolling interests and goodwill, tions, will be further useful for staging
the issues that must be understood, and fair value valuation for all assets accurate analysis scenarios. Being able
analyzed, and acted upon. (IFRS 3.36). Acquired intangible assets to quickly and accurately produce ad
must also always be measured and hoc, pro forma reports for all scenarios
SAP has built a comprehensive suite reported. There is no “reliable measure- will ensure senior management has the
of tools, applications, and best prac ment” exception, and recognition of information they need to accurately value
tices around IFRS adoption by North gains or losses is not allowed unless and negotiate ownership interests. SAP
American organizations. Supporting the related to a change in controlling inter- ERP Financials supports a broad variety
overarching need to accurately assess, est. Further changes are being consid- of consolidation and business combina-
measure, and analyze the impact of var- ered under a new IASB agenda item that tion methods compatible with IFRS.
ious adoption methods and understand would update rules for the accounting Additional functionality within SAP
their impact on the balance sheet and for joint ventures and other “common BusinessObjects Business Planning
income statement, the SAP® solution set control” transactions. These could be and Consolidation enables analysis of
begins with the SAP BusinessObjects™ valued at “proportionate consolidation” potential business impacts from all IFRS-
Business Planning and Consolidation of assets, liabilities, income, and expens- related decisions. (SAP BusinessObjects
application and the SAP ERP Financials es, or alternately by the equity method. Business Planning and Consolidation
solution. With unique and specialized is available as a version for the SAP
IFRS and U.S. GAAP starter kits, these Impact: These rules may have a minimal NetWeaver® technology platform and
applications are set up to be imple- impact on day-to-day accounting opera- a version for the Microsoft platform.)
9
Impact: Because companies have often
used multiple tax, cost, and other man-
agement depreciation methods for finan-
cial accounting purposes, the transition
to IFRS will require extensive analysis
and careful planning to smooth the eco-
nomic impact of potential revaluations.
The “good news” is that IFRS adoption
may reduce the expense and effort
of calculating many of these separate
depreciation methods, which will no
longer be allowed. However, as IFRS
requires inclusion of depreciation into
product costs using full-absorption
costing, the rules will carry offsetting
efforts made necessary in other areas,
The collection of knowledge and extensive analysis including inventory values. In many cas-
es, the loss of various tax and income
required for the IFRS project make it necessary to statement advantages of accelerated
start it quickly and coordinate it with other projects depreciation may cause an abrupt fluc-
tuation in apparent corporate profitability.
that involve IT and financial reporting departments. It may be desirable to take steps to
There are many ways in which companies can syn- mitigate these impacts by spreading
them over a period of time before IFRS
chronize projects to serve common interests. reporting will be required.
10
Furthermore, because fixed-asset costs simplify long-term efforts in this area. Receivables, Payables and
are a potential or required component However, steps to confirm compliance, Borrowing
under certain IFRS inventory and project and any changes to LIFO or other disal-
valuation methods, it is necessary to lowed methods, will require analysis Issue: Receivables and payables are
coordinate this analysis with an evalua- and system or process conversion. to be recorded at fair value (IAS 39.43).
tion of the impacts in those other areas. Full-absorption costing will require man- Subsequent assessments are to be
Overall, SAP software’s sophisticated ufacturers to know the kinds of costs at amortized cost, and anything with
asset-accounting features enable unlim- (such as overhead and depreciation) a significant credit duration must be
ited flexibility in the application of various that might be included in inventory and discounted (IAS 18.11 contains an
cost bases, depreciation methods, and how these costs differ under IFRS. example for revenue accounting). If
useful lives – in parallel versions for These additional data collection require- a receivable is in default, its carrying
IFRS, national, tax, insurance, or other ments, and changes in fundamental amount is to be written down to its
purposes – making it the perfect appli- accounting treatments, may induce recoverable amount, which can be
cation suite to support these important affected companies to reevaluate their either “value in use” or fair value less
regulations. The IFRS-compliant soft- inventory systems, especially when costs to factor (IAS 36.9 and 59). All
ware from SAP handles all the calcula- inventory documentation is newly borrowing is recorded at amortized
tions and volumes necessary to be in required at a more detailed level than cost, using the “effective interest rate”
full compliance. might be currently kept. method, which deducts borrowing costs
from the principal and amortizes them
Inventory and Stock Valuations Recommended approach with SAP over the period of the debt (IAS 39.46).
software: An extended consequence of
Issue: Speaking of inventory values, the revaluation of fixed assets can be a Impact: IFRS regulations will require
all inventory and stock will need to be change in allocated inventory expenses. careful review and revaluation of pay-
handled similarly to current U.S. and Companies that find themselves no ables and receivables, as credit situa-
Canadian GAAP LOCOM – or, as it’s longer able to utilize favored LIFO cost- tions are known. Factoring and borrow-
written under IFRS, “net realizable ing algorithms will have to confirm that ing costs, along with related tax and
value,” which must net estimated their new inventory costing methods do other advantages, will require specific
selling prices with costs to complete, not have an immediate adverse effect treatments and reporting. This is espe-
transport, and sell (IAS 2.9 and 10). on reported profitability. They also must cially important where different curren-
LIFO is specifically not allowed, and ensure that they are capturing all pre- cies complicate the process and proper
FIFO may only be applied where scribed costs in their system and provide translation and revaluation techniques
items cannot be individually identified the correct documentation should FIFO must be maintained. Where systems
(IAS 2.25). Costs are to include all be preferred. With financial accounting, are not currently designed to capture
costs of purchase, conversion, and controlling, and materials functionality, the necessary information and calculate
transportation, plus depreciation costs SAP applications can compute the the proper values, an evaluation may
where applicable (IAS 2.6). product cost calculations required by be in order to study the costs and
IFRS as well as those that may be rewards involved, as well as ensure
Impact: Companies already consistently required under U.S. and Canadian that all required IFRS statements can
using LOCOM methods will find follow- national accounting standards. In addi- be produced successfully.
ing this regulation easiest. In cases tion, a material ledger function allows
where multiple inventory valuation the software to perform the actual Recommended approach with SAP
methods are used for tax, profitability, costing required by other jurisdictions software: All cash-related applications
or other purposes, IFRS may even in parallel with IFRS. currently in use should be reviewed to
11
set up to manage sales transactions.
As these are often beyond the scope
and control of the accounting and report-
ing departments normally involved in
compliance projects, many companies
will find it challenging to ensure all related
systems are updated consistently.
12
fair value must be accounted as either Income Taxes Leasing
an expense or an asset (IFRS 2.7). In
the case of options or other share- Issue: Taxes payable based on current Issue: IAS 17 currently distinguishes
based incentives, market value of and prior period business activity must between “finance leases” and “operat-
the instruments must be charged as be recorded as a liability to the extent ing leases,” though the IASB November
an expense over the period in which that they remain unpaid on the balance 2008 discussion paper is intended to
the benefits vest (IFRS 2.10). sheet date (IAS 12.12). Deferred tax eliminate operating leases as a class
liabilities are also required to be recog- and require all leases to be recorded as
Impact: North American companies nized (IAS 12.15). finance leases by 2011. Finance leases
will continue to be required to verify transfer all risks and rewards to the
amounts of unrecorded sick time and Impact: Income tax liabilities based on lessee and are recorded as an asset
vacation accumulations, as well as in- capital expenditures will be especially on the balance sheet. Lessors record
vestigate potential for significant equity complex to track and record. “Taxable leases as liabilities on their balance
compensation liabilities that must be temporary differences” have limited sheets (IAS 17.4, 20 and 25). Operat-
brought onto their expense books under exceptions related to goodwill and other ing leases, while they are still allowed,
IFRS. Updating personnel, benefit, and business combination issues, but they recognize lease payments as expenses
compensation systems to accommodate will generally require careful tracking over the time period that the asset is
the new rules will be necessary to en- of all differences between carrying used (IAS 17.33).
sure documentation of compliance, as amounts and related tax bases. These
will planning for the orderly transition of amounts will be required to appear on Impact: Companies will need to review
the additional expenses to the income IFRS financial statements. all existing lease agreements to deter-
statement in cases where equity com- mine their treatment under IFRS. As
pensation programs are not currently Recommended approach with SAP with depreciation, the standard may
treated according to IFRS regulation. software: All capital expenditures and have a material effect on production
related asset- and project-tracking sys- and inventory costs. Leasing rules under
Recommended approach with SAP tems should be reviewed to confirm all IFRS could also influence the structure
software: Where current accounting necessary IFRS data is being captured. of future lease agreements.
practices for accrued absences, holi- Research should be conducted to con-
days, and vacations can be confirmed firm all deferred tax liabilities, and proper Recommended approach with SAP
in compliance with IFRS, the major entries should be made to reflect them software: Updated lease management
remaining concerns will center on en- if they do not already exist. Audits may and tracking systems may prove neces-
suring that shared-based incentives be useful to ensure that updates to the sary as IFRS regulations move toward
are being properly expensed as they tax basis are well coordinated with full “finance lease” treatment for all
occur. A full assessment of all out- changes in the underlying asset and leases. Review of impacts to production
standing obligations will need to be project systems. Sophisticated asset- and inventory costing is necessary as
tested against both the balance sheet accounting functionality from SAP en- well. Through its asset-accounting func-
and income statement to ensure first ables correct tax application of various tions for lessees, SAP software sup-
reporting under IFRS does not produce cost bases, depreciation methods, and ports accounting for both operating and
a sudden difference that might be of useful lives. finance leases. It further offers a com-
concern to investors. In certain cases, plete leasing solution (the SAP Leasing
a phased approach of bringing the obli- application) that includes contract man-
gations to their proper statement will agement and accounting for lessors
be preferred. that can help automate the administra-
tion of all agreements.
13
Valuations Impact: Any significant investment in using the POC method – and to apply a
internally developed projects, from parallel completed-contract method of
Issue: Regarding projects and other computer software to revenue-producing valuation if needed. SAP treasury appli-
intangible assets, IFRS specifies that assets, will need to be treated carefully cations provide multiple valuation meth-
research costs remain as expenses, under IFRS. Project management sys- ods for a wide range of financial instru-
while development costs must be capi- tems must be checked to ensure they ments. In addition, there are options to
talized once technical or commercial generate the necessary accounting in- set up multi-GAAP accounting, using
feasibility is established (IAS 38). Mar- formation for proper capitalization and predefined rules in parallel valuation
ketable securities and hedge account- amortization based on feasibility and areas. Also supported are comprehen-
ing require assignment to one of four other project milestones that might be sive functions for hedge accounting
holding categories that determine pre- relevant. Hedge accounting and han- under IFRS 39 and FASB 133.
sentation on the balance sheet as well dling of all marketable securities
as treatment of unrealized gains and will be especially complex. New appli- Cash-Flow Statements
losses (IAS 39). Derivative instruments cations are often required to meet IFRS
must be tracked on the balance sheet criteria in this area, and extensive and Issue: The statement of cash flows is
at fair market value, and any other spe- careful documentation of all transactions a mandatory component of financial
cial treatment will require extensive and and treatments is required. This is gen- statements under IFRS, as an equal
careful documentation including risk erally regarded as the single most com- partner to the balance sheet and the
measurement and effectiveness as- plex area of the new regulations for statement of income.
sessment. Long-term contracts, or adopting businesses.
any agreement extending beyond the Impact: IFRS will require an analysis of
term of the reporting period, must be Recommended approach with SAP existing corporate cash-flow reporting
tracked according to percentage of software: Controlling and project-system for regulatory purposes. Companies
completion (POC) for both construction functionality enables SAP software to preparing a cash-flow statement for the
and service contracts (IAS 11). handle long-term construction contracts regulators for the first time will have to
decide 1) whether to use the direct or
indirect method and 2) how to classify
their activities (operating, investment,
or financing) according to the catego-
ries in IAS 7. Many companies may
want to consider changing their chart
of accounts and the accounting entry
logic in their software programs to obtain
the right classification and level of detail.
14
Determining Organizational
Consequences
How Moving to IFRS Will Affect
Your Business
15
Project Considerations for
Adopting IFRS
The Project Team and Portfolio
Who Is Involved? carefully by tax accountants to ensure panies are evaluating their IT projects
a smooth transition. more closely than ever before.
To cover the wide array of issues in- Resources and budgets are tight.
volved in adopting IFRS, companies External Auditors Meanwhile, key decision makers
need an interdisciplinary team. The Involving the company’s external audi- and IT and accounting staffs are
broad nature of the project requires tors is important to remove a lot of the dealing with other projects and
the support and participation of man- guesswork from IFRS adoption. Signifi- concerns.
agement at the highest level. And cant uncertainty arises when compa-
because the project may affect many nies – even those whose managers Management may ask, with some justi-
aspects of the business organization, understand the new requirements – are fication, why the company must invest
several departments outside financial not sure to what degree a specific re- resources in an accounting project that
accounting should be involved as well. quirement applies to them or how their primarily satisfies a statutory require-
The team should include, at a minimum, preferred treatment may be assessed ment. Other projects with more obvious
management accountants, tax accoun- or allowed under the new rules. Issues and immediate business value are com-
tants, external auditors, and IT staff. of materiality can also arise: it is entirely peting for the same resources – resourc-
possible that a current accounting prac- es that are also needed for routine sys-
Management Accountants tice, although it may not be identical to tem maintenance and for accounting
Adopting IFRS as a primary reporting the IFRS rule, leads to a materially simi- departments, whose resources are
and management standard can bring lar result. The external auditor can help stretched even for regular workloads.
far-reaching changes, and establishing identify the more significant differences,
it as the reporting standard will affect thereby reducing the scope of the initial Project fatigue and widespread skepti-
many internal measurements. To make adoption project. cism about yet another “revolution”
comparisons between actual and plan- can result in a wait-and-see approach
ning valuations, a company’s manage- IT Department to IFRS adoption, particularly when
ment accountants must examine the Your IT department will be responsible companies expect a push-button IT
planning data and processes and adapt for handling many of the system changes solution for it. But the collection of
them for IFRS. Product costing, long- required by IFRS adoption. In addition knowledge and extensive analysis
term construction, and other valuation to managing any system configuration, required for the IFRS project make it
activities must be addressed from their the department must also determine necessary to start it quickly and coordi-
beginning. Revenue, stock, and other where the required accounting data will nate it with other projects that involve
accounting could be fundamentally come from and how it will be compiled IT and financial reporting departments.
affected. and computed. In a heterogeneous sys- There are many ways in which compa-
tem environment, this means examining nies can synchronize projects to serve
Tax Accountants various specialty and legacy systems common interests. For example, adopt-
Until national tax regulations are har- as well as their interfaces (with each ing a single global reporting standard
monized with IFRS, companies moving other and with SAP solutions). can be a catalyst for harmonizing
to IFRS will still carry the important and accounting structures and processes,
burdensome challenge to choose the How Will IFRS Affect the Project enabling a fast close and reducing the
most advantageous tax treatments for Portfolio? time and expense of monthly and quar-
their activities separate from their other terly reporting cycles.
reporting treatments. New confidentiality It is important to consider how the
and tax audit issues – such as who has IFRS project will affect a company’s
access to the data – must be analyzed larger project portfolio. Today, com
16
SAP Has the Tools and Expertise
to Handle IFRS
Across the Globe
17
• IAS 14: Segment Reporting. SAP recorded in both transaction and SAP Services – Helping to Ensure
applications have the financial account- functional currencies as they occur, a Smooth Transition
ing and profit-center accounting func- rather than after the fact. Comprehen-
tionality needed to provide a robust sive drill-down functions ensure that In addition to the necessary functional
and flexible basis for both your man- the original currency and the exchange depth and breadth contained in its solu-
agement reporting and segment rate employed are always available. tions, SAP has the knowledge and oth-
reporting needs. Enhanced consoli- SAP software also provides functions er resources needed for a successful
dation systems functionality in SAP for the revaluation of foreign currency IFRS implementation. Its years of expe-
BusinessObjects Business Planning items at market rates on the balance rience and global reach are valuable as-
and Consolidation supports all man- sheet date – and supports the trans- sets, helping companies make the right
agement consolidations for segment- lation of foreign currency financial decisions, avoid costly mistakes, and
reporting purposes. statements in consolidation. create long-term accounting strategies.
• IAS 16: Fixed Assets. Asset-account- • IAS 22: Business Combinations. SAP Training – Pointing Out What
ing functionality enables SAP software SAP ERP Financials supports a broad to Expect
to provide unlimited flexibility in the variety of consolidation methods com-
application of various cost bases, patible with IFRS. Additional function- SAP offers training to help companies
depreciation methods, and useful ality within SAP BusinessObjects understand the effects of IFRS adop-
lives – in parallel versions for IFRS, Business Planning and Consolidation tion on their current SAP software sys-
national, tax, insurance, or other enables analysis of potential business tems and to deal with both the new re-
purposes. impacts from all IFRS-related porting requirements and the challenge
decisions. of parallel reporting and accounting
• IAS 17: Leasing. Through its asset- rules.
accounting functionality for lessees, • IAS 38: Intangible Assets. The pro-
SAP software supports accounting cess of capturing costs for internally In addition, SAP consultants can help
for operating and financing leases. It generated intangible assets is sup- you:
also offers a complete leasing solu- ported by SAP ERP Financials • Identify where your company can use
tion, SAP Leasing, that includes con- through its treasury and investment SAP software to get the required re-
tract management and accounting for management components. Compa- porting data
lessors. nies can create parallel versions ei- • Configure or reconfigure an existing
ther to capitalize these costs, as re- SAP software system to deliver data
• IAS 18: Revenue. Revenue recogni- quired by IFRS, or to expense them that is compatible with IFRS and can
tion functions enable SAP software for other purposes. fulfill your national reporting
to fulfill various rules of revenue re- requirements
porting according to IFRS and U.S. • IAS 39: Financial Instruments. SAP • Review and optimize your closing
GAAP. Revenue recognition provides treasury applications provide multiple processes for faster closings
unlimited flexibility by decoupling the valuation methods for a wide range • Review and optimize your account
realization of revenues from invoicing of financial instruments. In addition, and organization structure for IFRS
and automates the process of reve- there are options to set up multi-GAAP
nue reporting. accounting, using predefined rules
in parallel valuation areas. Also sup-
• IAS 21: Foreign Currency. SAP soft- ported are comprehensive functions
ware fully supports multiple currencies for hedge accounting under IFRS 39
so that business transactions can be and FASB 133.
18
SAP: Your Partner on the Road to IFRS
An Ideal Platform for Optimizing the
Reporting Process
19
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