Smart Move!!! Shift to IFRS

The use of International Financial Reporting Standards (IFRS) as a universal financial reporting language is gaining momentum across the globe. IFRS has already been adopted by many countries in Asia and Europe, and is rapidly gaining acceptance in the remaining key markets. US SEC is proposing a roadmap requiring IFRS adoption between 2014 and 2016. Adoption of IFRS will be one of the most significant changes that publicly traded companies will have to deal with over the next few years. In line with the global trend, in India, Ministry of Corporate Affairs (MCA) along with the Institute of Chartered Accountants of India (ICAI) has proposed a roadmap for convergence with IFRS for certain defined entities, with effect from accounting periods commencing on or after April 1, 2011.

 
IFRS adoption or convergence will affect information systems in many ways, from the initiation of transactions through to the generation of financial reports, even if merely through the creation of new accounts in the general ledger. IFRS is accounting-driven but it will drive major changes to IT systems, as well as business processes and personnel. Research indicates that IT costs are generally a significant portion of the cost of IFRS adoption or convergence.  Organizations benefit when they identify and integrate the efforts of the IT team early in the IFRS adoption or convergence process.  IT efforts will comprise a mix of short and long-term projects within the organization’s overall IFRS initiative. The IFRS adoption or convergence effort provides opportunities for achieving synergies with other IT projects and strategic initiatives, such as an ERP implementation. CIOs will anticipate changes in information systems in four areas: applications, reports, data and technology infrastructure. Adoption or convergence to IFRS may require various IT applications, including ERP applications, to be enhanced, upgraded or replaced. This provides enormous opportunities for IT Services companies to look aggressively in this space. 

Our research indicate that the opportunities in IFRS business space is divided on four fronts, first there are pure play Advisory Services players, but probably what they lack currently is the expertise to implement the advised solution on the enterprise systems critical for IFRS implementation success. Second there are consulting companies with offshore presence who provide end to end services from Advisory to ERP tweaking for IFRS requirements. These are the companies that probably would dominate the systems IFRS change implementation space for some time.  Then there are Product companies providing there solutions and experts at a bomb of a price to IFRS implementations, these are initial phases and product companies would make good business but as the market matures would lose its edge to the fourth type of players like Indian offshore service providers who currently seem to be fence sitters and watching the space to have right opportunities.