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As is becoming increasingly apparent, an IFRS conversion is not primarily an exercise in reshuffling the chart of accounts, nor is it principally a technical accounting and financial reporting matter. Rather, your company is likely to spend a significant amount of time and effort addressing concerns about taxes, valuation, treasury, legal, personnel, technology and communications. Clearly, a great deal of work lies ahead. Yet, despite these challenges, you may find that the benefits of reporting under IFRS outweigh the costs.

Consider these factors:

Conversion provides a fresh look at stale practices. If your close process includes reconciling multiple generally accepted accounting principles (GAAPs), and dealing with a variety of sub-ledgers, manual adjustments, data hand-offs, and accounting overrides, you may want to consider a fresh look at your accounting policies and procedures. IFRS provides the opportunity.

Conversion can be a catalyst for streamlining and consolidation. As your company expands through growth and acquisitions, your information technology systems may become increasingly convoluted. Many companies operate a patchwork of legacy accounting and Enterprise Resource Planning (ERP) systems — systems that can’t talk directly, leading to error-prone adjustments and reconciliations. Moving to IFRS provides a chance to streamline and consolidate these disparate systems.

IFRS offers an opportunity to use principles-based accounting. Many finance professionals have become increasingly frustrated with U.S. GAAP and its voluminous rules for dealing with virtually every accounting issue. For a decade or more, CFOs and other finance executives have openly pined for principles-based accounting to help standardize and improve the reliability of financial reporting. IFRS answers that wish.

IFRS helps open the doors of the global marketplace. Adopting IFRS may improve access to foreign capital markets by giving foreign investors greater insight into a company’s financial performance. Such investors may be more comfortable with or have more confidence in a globally accepted set of accounting standards. Companies themselves can also benefit from improved ability to benchmark with peers and competitors. Many Consumer Product companies operate on a worldwide scale: Growing markets. Expanding customer bases. Escalating merger and acquisition activity. The fact is, your company already does business globally. Shouldn’t you be reporting under a global standard?

Consumer Products Competitive Landscape*

Company

Altria Group, Inc. Hewlett-Packard Company Samsung Electronics Co., Ltd. Nestle SA Matsushita Electric Industrial Co., Ltd. The Procter & Gamble Company Sony Corporation Toshiba Corporation Dell Inc. Nokia Corporation Unilever Group LG Electronics Inc. Motorola, Inc. Japan Tobacco Inc. Canon Inc. PepsiCo, Inc. Koninklijke Philips Electronics N.V. Sharp Corporation Bridgestone Corporation Tyson Foods, Inc. The Coca-Cola Company Fujifilm Holdings Corporation Imperial Tobacco Group PLC Michelin Group The Goodyear Tire & Rubber Company

U.S. GAAP

X X

X X X X X

X

X X X

X X

X

IFRS

X

X X

X X

International

Revenue**

Other

Operations

(Billions)

X

$101

X

$92

X

$92

X

$79

X

$77

X

$76

X

$64

X

$60

X

$57

X

$52

X

$50

X

$48

X

$43

X

$40

X

$35

X

$35

X

$33

X

$27

X

$26

X

$26

X

$24

X

$24

X

$21

X

$21

X

$20

X

X

X

X X

X

  • *

    Top 25 Global Consumer Products companies, based on revenues, as of the most recent annual publicly filed report.

** Obtained from the most recent annual publicly filed report.

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