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An IFRS Fable: The Company that Waited Too Long
from SAP

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Many U.S. companies are taking a wait-and-see stance and interpreting the switch from U.S. Generally Accepted Accounting Principles (GAAP) to International Financial Reporting Standards (IFRS) as a matter of compliance rather than an opportunity to become more globally competitive by improving key internal processes. Even with more than 100 countries already using IFRS, U.S. companies seem to be waiting for the government to declare a definitive date for their mandate of IFRS reporting before they even approach the transition.

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Transitioning to IFRS offers many benefits beyond compliance. Companies completing the transition have reported greater efficiencies in their financial processes, greater profitability under IFRS reporting rules, easier access to foreign capital markets, and improved empirical analysis capabilities resulting from consolidating multiple global divisions on one reporting standard.

Of course, compliance is still important. While the SEC has not set a firm deadline for the IFRS transition, it is clear that the rest of the world has already moved in that direction. The best-run businesses of the future will report under IFRS, so it is crucial for SAP customers to transition soon — and on their own timetable.

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