CFOs at U.S. companies expect that the transition to International Financial Reporting Standards will give them the ability to transform their finance departments, according to a new survey, but the price tag could be high.
Eighty percent of the 208 CFOs and other executives surveyed by consulting firm Accenture said they expect to make significant improvements within the finance department as a result of the conversion from U.S. generally accepted accounting principles to IFRS. The Securities and Exchange Commission proposed a roadmap late last year for transitioning to IFRS from U.S. GAAP over the next few years, but the new SEC Chairman, Mary Schapiro, has expressed reservations about approving the roadmap.
Executives expect IFRS would affect not only finance at their companies, but other areas as well. More than half (52 percent) of the executives surveyed said that adopting IFRS will affect all major areas of their business, including information technology (identified by 71 percent of respondents), business operations (67 percent), external stakeholder relations (62 percent) and human resources (52 percent). More than half (53 percent) of the executives said the conversion will also affect customers.
Estimates of the costs vary. Accenture found that 43 percent of respondents from companies with revenues of at least $50 billion said they expect to spend less than $25 million on IFRS conversion, while 30 percent anticipated spending more than $100 million. By contrast, companies with revenues between $1 billion and $4.9 billion anticipate spending an average of $23.2 million, or 0.731 percent of revenues, while companies with revenues of at least $50 billion estimated that they will spend 0.103 percent of revenues to convert to IFRS.
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