Preparing your stakeholders for IFRS

Many Canadian enterprises are now in the transition year of their move to IFRS in 2011.  Most of the companies have so far only focused internally with very limited disclosures for their plans for IFRS transition.

The key advantage for adopting IFRS is to financial results more transparent and comparable for the ultimate users of financial statements. However, till the time IFRS is fully adopted across the globe, it would be hard to determine the impact that IFRS would have on an entity.

For the users of the financial  statements, there are many key shareholders who have a vested interest in an enterprise’s performance who need to understand what reporting financial information under IFRS will mean for them.  These key stake holders are not limited to — the shareholders, research analysts, potential investors, regulators, lenders, and others.  All the entities need to include in their transition plans a communication strategy with the external stakeholders.

The key questions that an entity has to ask itself are as follows:

• Do external stakeholders understand the IFRS-related changes that are coming?
• Do the analysts understand the impact of IFRS?

KPMG conducted a survey to assess the understanding of IFRS and its impact on the external stakeholders. The results of this survey suggest that external stakeholders still have a lot to learn about IFRS and how it will affect the financial reporting of specific enterprises.

KPMG publication: Preparing your stakeholders for IFRS