Costs of converting to IFRS?

Question

I have heard that cost of converting to IFRS from local GAAP could be significantly high. It it true? Is it certain that such costs will be compensated by higher efficiency?

Answer 1

It is true that conversion would involve substantial costs in staff training & IT system modifications also you need to overcome the employee resistance for change. Generally the conversion process would start with a gap analysis of the current GAAPs used & IFRS to identify the areas to be changed. You might have to outsource the gap analysis to an Accounting firm & they alone may charge a significant amount.

However the conversion, in theory, should result in cost reductions. Practically the costs reductions will depend on the type of the organization & the commitment of the management toward proper implementation.