u003cpu003eFrom 2018 onwards, companies will need to align themselves with the new IFRS accounting standards aiming to simplify reporting and make it less prone to manipulation. Corporates are in dire need of a wake-up call regarding the implementation of these standards.u003c/pu003eu003cpu003eu0026nbsp;u003c/pu003eu003cpu003eThe new requirements in relation to IFRS 9 Financial Instruments, the new accounting standards set by the International Accounting Standards Board (IASB), will come into effect on 1u003csupu003estu003c/supu003e January 2018. Their aim is to simplify reporting by companies, to make it more transparent and better aligned with their business.u003c/pu003eu003cpu003eWith only 13 months to go, companies need to develop a plan to ensure their systems and processes can meet these new requirements. In this context, KPMG Mauritius recently organized a workshop covering three important new IFRS Standards, namely IFRS 9 (financial instruments), IFRS 15 (revenue from contracts with customers) and IFRS 16 (leases). The session was run by Melissa Stevens and Shehnaaz Suleman, respectively Senior Manager and Manager, KMPG South Africa.u003c/pu003eu003cpu003eThe essence of the new standards is about revenue recognition and the measurement of financial instruments, explained Melissa Stevens. u0026ldquo;u003cemu003eThe real key idea that we wanted to bring across is that these standards are coming very soon and as of 2018/2019, they will be in effect. They are fundamentally different from the current accounting principlesu003c/emu003e,u0026rdquo; she stated.u003c/pu003eu003cpu003eThere is a huge shift and process that will need to be undertaken in the intervening years to make sure that by the time the standards become effective clients are absolutely ready to implement them, according to her.u003c/pu003eu003cpu003eTherefore, the first step to be taken by companies like KPMG to gear up for this major shift has to be education; which can be demonstrated through such workshops. Once the understanding is there, discussions need to be initiated, along with engagement with clients, as well as with other practitioners in business.u003c/pu003eu003cpu003eKPMG is trying to simplify these concepts because they are very theoretical, commented Shehnaaz Suleman. u0026ldquo;u003cemu003eIt is time to think about their practical applications and to start conversation with regulators, clients and all the entities that are going to be impacted about the transition towards the new standardsu003c/emu003e,u0026rdquo; she highlighted.u003c/pu003eu003cpu003eThe idea behind such workshops is to also make sure there is an understanding about where the industry is heading and what are the challenges it comprises, since clients are on the lookout for the practical implications, highlighted Desiré Lan, Partner, KMPG Mauritius.u003c/pu003eu003cpu003eu0026nbsp;u003c/pu003eu003cpu003eu003cstrongu003eValuation of financial assetsu003c/strongu003eu003c/pu003eu003cpu003eIt is to be noted that IFRS 9 came along following the financial crisis since it is more about how financial assets are valued, Desiré Lan explained. u0026ldquo;u003cemu003eThere is pressure from the regulators to reflect more on business reality, since everything seemed so rosy before the financial crisisu003c/emu003e,u0026rdquo; he said. The issue and importance of transparency in reporting however is not a new one and has been raised several times.u003c/pu003eu003cpu003eHow do these new standards differentiate themselves and aim for impactful change? The answer lies in the way implementation of these principles is carried out, since the standards are designed to achieve more disclosures and the communication of important details. u0026ldquo;u003cemu003eIt is not the policy or theory but actually the way it is implemented that will get us to the right outcomeu003c/emu003e,u0026rdquo; stated Melissa Stevens.u003c/pu003eu003cpu003eThe new standards, in Shehnaaz Sulemanu0026rsquo;s view, come with very less room for manipulation, even though people always find loopholes. u0026ldquo;u003cemu003eThe cool thing is that all three standards are driving to the same objective. There is interplay between them for transparent reportingu003c/emu003e,u0026rdquo; she added.u003c/pu003eu003cpu003eHow is the Mauritian business community faring in the face of the upcoming changes? Different industries are at different levels in terms of preparedness, answered Desiré Lan. The banking sector however has already started picking up and will have to undergo major changes in terms of systems for example, since IFRS 9 is not just a quick adjustment.u003c/pu003e
IFRS standards: Meeting the need for more transparency
