This article is by Scott Coulter and Chris Casey.
When IFRS 9 was issued in the wake of the 2008 financial crisis, the implementation date of January 1st, 2018 seemed ages away. Yet, with less than ten months to go, most organizations find themselves behind schedule to comply by the fast-approaching deadline.
Companies must decide how they will get ready for the new accounting standards, and most are learning that poor preparation could result in the introduction of manual, incredibly labor-intensive processes that will require significant manpower and data analysis.
An analysis by the European Banking Authority in November 2016 found that most firms identified data quality and the availability of data as the most significant challenges faced in their IFRS 9 implementation programs. Similarly, a Deloitte study of 91 global banks found that almost 50% believe they do not have enough technical resources internally to deliver on their IFRS 9 project on time and on budget.
Most financial services organizations have recognized the adoption and implementation of the standards will require comprehensive changes to their data, systems, models, and controls. Given that internal resources are scarce, the time to act to accelerate the IFRS 9 implementation is now.
Steps to implement before the deadline
Given the breadth and complexity of the new standard, here are a few key steps to fast-track your implementation program and be ready to comply by the deadline.
- Perform initial assessment/gap analysis: Assess current state systems and data; detect any inadequacies in internal expertise, resources or data; determine data and systems requirements to address those inadequacies; determine scope of work required to become compliant.
- Develop an action plan for implementation: Determine an intended final state and build a step-by-step approach to bridge the gaps identified; determine key milestones, dependencies, critical path, responsibilities and key stakeholders.
- Obtain project resources and data: Obtain internal budget, hire people or form dedicated internal teams, increasing the resource pool required to perform the analysis and build models; source required data to meet requirements determined in initial assessment, either by sourcing externally or mining internally.
- Build internal systems and functionality: Leverage product resources to expand internal accounting and reporting systems to incorporate new data inputs and generate new IFRS 9-specific outputs.
- Validate and test: Perform testing of new and upgraded systems, as well as input and output data, incorporating internal and external audit functions in the process.
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