Table of Contents
1.Strategic Objectives and Business Rationale to Understand
What is Purpose of Conversion
- Assess why the organization is converting:
- Global expansion or IPO outside the U.S.
- Alignment with parent or subsidiary companies using IFRS
- Regulatory requirements in foreign jurisdictions
Stakeholder Needs
- Understand how investors, lenders, analysts, and regulators will be impacted by the change in accounting framework.
2. Differences Between US GAAP and IFRS
Conceptual Approach
US GAAP is more rules-based, while IFRS is principles-based, offering broader guidelines that require more professional judgment.
Key Technical Differences
- Revenue Recognition (ASC 606 vs IFRS 15)
- Leases (ASC 842 vs IFRS 16)
- Financial Instruments
- Inventory (LIFO not allowed under IFRS)
- Development Costs (Capitalized under IFRS)
- Impairment Testing
- Income Taxes
- Provisions and Contingencies
3. Project Planning and Governance
Project Management Office (PMO)
- Establish a dedicated team to oversee the conversion process.
- Diagnostic and gap analysis
- Design and planning
- Implementation
- Dual reporting period
- Go-live
4. Financial Reporting and Restatement
IFRS 1 – First-time Adoption
- Understand mandatory and optional exemptions in IFRS 1.
- Restate comparative financials and prepare the opening IFRS balance sheet.
Chart of Accounts and Reporting Format
- Update the chart of accounts to align with IFRS.
Disclosure Requirements
- IFRS typically requires more qualitative disclosures.
5. IT Systems and Data Requirements
- Modify ERP systems to handle dual or IFRS-only reporting.
- Update data capture and reporting formats.
- Customize systems for fixed assets, leases, taxes, and consolidation.
6. Tax Implications
- Differences in recognition and measurement rules affect deferred tax.
- Shifts in accounting treatment can affect tax liabilities and effective tax rate.
- Ensure compliance with local tax regulations.
7. Internal Controls and Audit Readiness
- Redesign SOX controls where necessary.
- Engage auditors early for guidance.
8. Human Capital and Training
- Provide IFRS training to relevant staff.
- Prepare teams for new workflows and metrics.
9. Impact on Business Processes and KPIs
- Evaluate effects on EBITDA, net income, leverage ratios.
- Review contracts and agreements impacted by financial metrics.
10. Stakeholder Communication
- Communicate the rationale and impacts to investors and analysts.
- Ensure regulatory compliance and disclosures.
11. Cost Considerations
- Estimate one-time and recurring costs (e.g., consulting, systems, training).
- Assess ROI in terms of improved reporting and strategic benefits.
Category | Key Considerations |
Strategic Objectives | Purpose, stakeholder needs |
Accounting Differences | Technical gaps, principle vs rule-based |
Planning & Governance | PMO, timeline, milestones |
Financial Reporting | IFRS 1, disclosures, restatements |
IT Systems | ERP changes, dual reporting |
Tax Implications | Deferred tax, ETR impact |
Internal Controls | SOX, control design |
Human Capital | Training, change management |
Business Operations | KPIs, contracts, metrics |
Stakeholder Communication | Investors, regulators |
Cost & ROI | One-time and ongoing costs |
How Faber LLP Can Support Your US GAAP/IFRS Transition
At Faber LLP, we understand that transitioning between US GAAP and IFRS is a complex, high-impact initiative that goes beyond financial reporting. Our multidisciplinary team brings deep expertise in both accounting frameworks, combined with practical industry knowledge, to ensure a seamless and efficient conversion tailored to your organization’s unique structure and goals.
We begin with a detailed diagnostic assessment to identify key differences between your current accounting practices and the target framework. Our specialists work collaboratively with your finance and executive teams to develop a customized roadmap, addressing policy gaps, systems integration, internal controls, tax implications, and stakeholder communication. Whether transitioning to IFRS for global reporting purposes or converting to US GAAP for SEC compliance, we provide strategic guidance every step of the way.
Faber LLP also offers hands-on support during the implementation phase, including restatement of prior period financials, development of IFRS- or US GAAP-compliant accounting manuals, training workshops for staff, and coordination with external auditors and regulators. Our goal is not only technical compliance but also operational continuity and clarity, enabling your leadership to focus on value creation and informed decision-making throughout the transition process.