Using IFRS to Drive Business Development: Opportunities for Small and Midsize Firms
EXECUTIVE SUMMARY * IFRS presents opportunities for small and midsize firms to grow. Developing an IFRS niche means more than learning the standards. It also requires adapting business development and marketing efforts. * Many U.S. subsidiaries of foreign-owned companies are changing to IFRS for their reporting standards. Likewise, U.S.-based companies with foreign subsidiaries will also benefit by having all entities report under one common international accounting system. The first wave of transition is happening now. With the AICPA's recognition in 2008 of the International Accounting Standards Board (IASB) as an accounting standards setter, the door is open for U.S. private companies to adopt IFRS. * The SEC's proposed transition of issuers to IFRS beginning in 2014 will take a significant amount of resources and manpower. Many companies will tap external sources to bolster their staff to make the shift. * Collaborating with local government on economic development projects aimed at recruiting foreign-owned businesses can help firms connect with potential clients. Chambers and other business alliances that bring together foreign-owned companies in the U.S. are also good sources of business development leads. ********** [ILLUSTRATION OMITTED] Inside the growing footprint of IFRS lies something many small and midsize CPA firms may be overlooking--rich opportunities for business development. IFRS-related work in the United States has largely been the domain of major accounting firms thus far. While national firms are filling many of the needs, there's a large space that small and midsize firms can occupy given the right positioning, knowledge and resources. To carve out an international niche, firms must be realistic about the challenges. Reaching critical mass as you grow your IFRS client base will take time. Building IFRS bench strength inside your firm will likewise take a commitment. The effort may mean an outflow of cash for the first couple of years. Yet for small and regional firms willing to put in the work, developing that kind of niche can ultimately drive profit. FILLING AVOID Many U.S. subsidiaries of foreign-owned companies are changing to IFRS for their reporting standards. Our firm of 100 professionals saw this repeatedly as we visited management of our German-owned clients in 2008. They were excited about the prospect of having common reporting standards among parent companies and their subsidiaries throughout the world. Likewise, U.S.-based companies with foreign subsidiaries will also benefit by having all entities report under one common international accounting system, saving considerable time, effort and cost related to managing operations and reporting consolidated results. The first wave of transition is happening now. With the AICPA's recognition in 2008 of the International Accounting Standards Board (IASB) as an accounting standards setter, the door is open for U.S. private companies to adopt IFRS. The SEC's proposal to transition issuers to IFRS beginning in 2014 (see sidebar, "IFRS in the U.S.: The Road Ahead," for more on what the SEC has proposed) will take significant resources and manpower. Many companies will tap external sources to bolster their staffs to make the shift. Businesses will need expertise and/or capacity to: * Make a preliminary assessment of the impact of adopting IFRS, including identifying areas that appear to be most sensitive to conversion. * Quantify the impact of adopting IFRS on the financial statements. * Develop a strategy, including a timeline, to properly implement the conversion. * Develop systems to properly accumulate and report financial information in accordance with IFRS. * Determine how a move to IFRS would affect regulatory agency policies and contractual arrangements (including debt covenants) that are currently based on U. …