New Developments on International Standards - IFRS 

April, 2009 -

  Technical Resolution 26 – FACPCE


Dated March 20, 2009 the FACPCE (Argentine Federation of Economic Sciences Professional Boards) approved Technical Resolution No. 26 “Adoption of the International Financial Reporting Standards of the Board” effective as from the years commenced after January 1st, 2011, not admitting an earlier application.


This step concludes the first part of the process started in 2007, where a commission integrated by representatives from the CNV and the FACPCE submitted to the Board of Directors of the CNV a proposal for the adoption of the IFRS for the entities that make a public offering of their securities or bonds. In November 2008, the Board of Directors of the CNV had approved the reviewed implementation plan prepared by the FACPCE.


If the compliance of the tentative schedule of the plan continues, by the end of April 2009 the adoption of technical resolution 26 by the Professional Boards of each jurisdiction would be pending as well as the adoption by the CNV by May 2009.


It is also relevant that what was originally conceived as an exclusive project for the application of the IFRS in the financial statements of the entities making a public offering of their securities, became in fact in a more ambitious reality and today Technical Resolution No. 26 states that the IFRS optionally apply to all the entities non reached by the mandatory application (which application is subject to the approval of the control agencies: IGJ (Inspection of Corporations) –Public Commercial Registries of each jurisdiction.


What do the IFRS – NIIF comprise?
 
The IFRS (or NIIF according to its acronym in Spanish) include both the standards issued by the current International Accounting Standards Board (IASB) as the former international standards (IAS) issued by the predecessor entity (IASC).


Technical resolution 26 explains that IFRS means the standards issued by the IASB in the official version in Spanish of such agency, the listing and date indication of the last version of which is attached as an Annex to the Technical Resolution No. 26, including:
 
1. the IAS issued by the IASC (NIC, according to its acronym in Spanish);
2. the IFRS issued by the IASB (NIIF, according to its acronym in Spanish);
3. the interpretations issued by the SIC (former interpretation committee);
4. the interpretations issued by the IFRIC (current interpretation committee).


Which are the main implications derived from adopting the IFRS - NIIF


1. Effective date and transition:


The technical resolution provides for the application of the IFRS to the financial statements (those required by the IAS 1) corresponding to fiscal years that commence as from January 1st 2011 (and including it) and its comparative information (in the case of the financial position statement, three columns shall be submitted: as of the end of the current year, as of the end of the prior year and as of the date of transition to the IFRS, which is the opening financial position statement) and for those of intermediate periods corresponding to year 2011 (by applying IAS 34).
 
Transition date means the first day of the year prior to the first year where the standard is applied.


For instance, an entity that closes its year on December 31 (65% of the entities listed at the stock exchange):


Transition


Fiscal year 2009


Fiscal Year 2010


Fiscal year 2011


Closing 31/12/2009


= Commencement


Closing


 


 


 


1/1/2010


31/12/2010


= Commencement


Closing


 


 


 


1/1/2011


31/12/2011



2. Challenges derived from the IFRS implementation process:


The impact of the migration to the IFRS goes beyond the accounting area and will result in changes in the entire organization that must be taken into account duly in advance.
 
The conversion to IFRS shall be a project that shall affect different functional areas of the companies, with multiple actors and related knowledge areas, and with dates to be complied with. In the current economic context, the entities listed in the stock exchange must face implementation costs brought about by the adoption of the international accounting standards.
 
They shall be required to:


A) Prepare a working plan enabling them to reach the application time in adequate conditions. In this line, the proposals come from the implementation plan of the FACPCE’s Special Commission and the assembly of a schedule incorporating the requirements of technical resolution 26 is essential.


B) Start with the adaptation of the accounting reporting systems to the new requirements. Professionals trained in the new standards in the financial area must interact with those who develop and update the accounting reporting systems in order to face the task on a joint basis and thus avoid the dispersion of efforts. The identification and evaluation of the accounting impacts must be adequately shown and disclosed within the company and towards third parties.
 
Counting on a well-planned project from the very beginning is essential to minimize surprises, attain a successful conversion and avoid the risk of not adequately complying with the terms required.


3. Training


Among the major challenges derived from the foregoing we see the training need as fundamental in order to undertake the necessary actions to implement the transition and dissemination to be made for the different interested parties.   


The entities affected are confronted with the need to start a strong training of their staff within the plans to be carried out, even in the middle of the current recessive context, with an appropriate monitoring.
   
Both the FACPCE (Argentine Federation of Economic Sciences Professional Boards) and the Boards that integrate it, such as the Universities and auditing firms that form part of the Forum of Firms of IFAC (International Federation of Accountants) have implemented courses and seminars for this purpose (http://web.ifac.org/download/Forum_of_Firms_Register.pdf). SMS is the only firm that integrates the Forum of Firms with headquarters in Argentina.


 



Link to article

MEMBER COMMENTS

WSG Member: Please login to add your comment.

dots