improving your boards performance – implementing ifrs russell frith
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Improving Your Board’s Performance – Implementing IFRS
Russell Frith
228.09.09
IFRS – Role of the Non-executive director
• Why move from UK GAAP to IFRS?
• Outline of conversion programme
• Implications for organisations
• Implications for non-executive directors
• Key questions for non-executive directors
328.09.09
Why move to IFRS?
• Public sector represents a considerable proportion of the economy and includes some very large entities which, if they were listed companies, would already be applying IFRS
• IFRS is regarded as the international gold standard • Convergence has been the aim across the world• Treasury want to be seen to be using the highest standards• Was unclear until July what the UK timetable for adoption of
IFRS might be – now proposed as 1 January 2012
428.09.09
Conversion programme – Trigger Point Strategy
Why have a Trigger Point Strategy?
• Keeps IFRS on the agenda• Ensures that difficult issues are tackled earlier• Ensures budgetary effects supported by understanding of the
issues• Should result in smoother preparation of first full IFRS based
accounts• Less risk of qualification of audit opinion in 2009/10
528.09.09
Outline of Conversion programme
Trigger Point 1: 30 September 2008
Opening balance sheet at 1 April 2008 prepared
Trigger Point 2: 31 December 2008
Completion of NAO audit of opening balance sheet
Trigger Point 3: 10 September 2009
Shadow IFRS accounts for 2008/09 prepared + IFRS budget data for 2009/10 submitted
Trigger Point 4: 31 December 2009
Completion of NAO audit of shadow accounts for 2008/09
NB: Dates in Devolved Administrations vary but the principles remain valid
628.09.09
Findings from opening balance sheet audits
“More work needed”
• PFI/PPP arrangements
• Leases
• Employment costs
• Intangible assets
728.09.09
Implications of IFRS for organisations
• Changes to accounts– Longer, more disclosures, new terminology– PFI/PPP assets likely to be on balance sheet
• Impact on budgets/estimates– Alignment project, treatment of PFI/PPP projects
828.09.09
Implications for non-executives
• Ensuring that management has a project plan
• Oversight of the conversion programme
• Involvement in shadow accounts process
• Consideration of auditors’ reports
• Understanding the impact on budgets/estimates
• Impact on risk register
928.09.09
Key questions for non-executives
• Are management’s conversion plans appropriate + on track?
• What are the main risks to successful conversion?
• What did the external auditors say about the opening balance sheet and the shadow accounts?
• What is the impact on our budgets and how we are monitored by HM Treasury/sponsor department?
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