The International Financial Reporting Standards (IFRS) has been increasing its global reach, with China, Malaysia, and India all in the process of deploying the reporting standard. The IFRS provides a common global language for businesses, allowing a company’s statutory reports to be understandable and comparable across international borders. As the EU recently formally adopted amendments to IFRS 11, the updated reporting standards could significantly impact businesses which aren’t using the appropriate CPM & financial software. Those firms which aren’t will either have to create or amend reporting structures themselves, a difficult process to manage.
Placing corporate performance management technology at the core of the finance department means that when amendments to reporting standards are issued, organisations can rely on software development teams to amend the IFRS templates. This means businesses don’t need to endure the burden of manually adjusting an excel spreadsheet, which can lead to unnecessary errors. As more countries begin adopting IFRS in order to compete globally, the standardisation of financial reporting is set to becoming increasingly important.
It has also been announced recently that members of the Chartered Institute of Management Accountants (CIMA) and the American Institute of CPAs (AICPA) are considering the option of a closer collaboration. This would include the creation of a third accounting association to combine the benefits of both services, which could come into play in 2016. This shows another example of how finance is becoming increasingly standardised internationally.
The global village – a common language for international accountancy
The IFRS Foundation and the Chinese Ministry of Finance are exploring ways to progress the use of IFRS within China, especially for internationally-orientated Chinese companies. Malaysian companies are also set to adopt the global accounting standards by 2018. The Chairman of the Malaysian Accounting Standards Board (MASB) recently advised that in 2016 it will be mandatory for private entities to apply a new reporting framework called the Malaysian Private Entities Reporting Standard (MPERS), which is almost identical to the IFRS for small and medium enterprises.
With the increased adoption of IFRS in the past decade, the accounting profession has become more globalised, with India also on the verge of adopting this common language for financial reporting. In regards to this, Ian Mackintosh, Vice-Chairman of the International Accounting Standards Board (ISAB), recently stated: “Generally [positive] results start to come out after two years of applying the standards. It would be reasonable to expect the benefits [in India] would start to flow in around 2018.”
For businesses adhering to IFRS standards, placing technology at the core of business operations will be key to maintaining productivity and working efficiently when amendments to reporting standards are made. Talentia’s Corporate Performance Management (CPM) solution automatically updates the IFRS template, ensuring companies are always adhering to the standards correctly.