Ahead of the 2012 reporting date for listed and significant public entities, Akintola Williams Deloitte has identifies responsibilities and challenges of International Financial Reporting Standards (IFRS) project team.

The IFRS project team is usually made up of the steering committee, the technical accounting committee, other team members, and the external consultants/advisors.

With the business world becoming more global, the need for a global financial reporting language like IFRS has been developed primarily to meet the information needs of shareholders, lenders and other investors.

Deloitte said the potential challenges of IFRS project team are coordination of efforts across multiple business units/locations; lack of organisation-wide buy-in; changes to the control environment may not be fully anticipated; failure to complete full assessment of Generally Accepted Accounting Principles (GAAP) differences including disclosures upfront; changes to reporting needs may not be fully anticipated; application of IFRS (Principles based); failure to focus on both the capabilities and modifications of existing IT systems; and potentially significant cost to adopt.

Other potential challenges Deloitte identified included tax consequences; cultural gap and buy-in; commitment from the leadership; stakeholder relations; selective change; project risk management; companies often neglected to take a holistic approach towards IFRS conversion; resulting in an ineffective conversion effort; impacts of IFRS conversions were underestimated; the conversion process extended beyond accounting to process, people, controls and technology.

“Nigerian companies have and will continue to raise capital from domestic and global markets. Market expectations and competitive pressures call for more transparency and better disclosures by Nigerian companies. Nigerian subsidiaries of multinational companies already report under IFRS,” Deloitte stated.

Akintola Williams Deloitte is a member firm of Deloitte Touche Tohmatsu Limited, a professional services organization that provides audit, tax, consulting, financial advisory and enterprise risk services.

“IFRS is driving the revolutionary world of accounting with over 100 countries either requiring or permitting its use. There is no doubt that conversion to IFRS is a huge task and a big challenge. Its revolutionary impact requires a great deal of decisiveness and commitment,” Deloitte added.

The professional services organization further noted: “It is a new world order in corporate reporting that will alter the financial reporting landscape and tax practice in Nigeria. Considering these factors, all stakeholders must be prepared to learn and relearn in order to minimize any negative impact while maximizing the benefits associated with IFRS adoption in the short, medium and long term.”