|
Ernst & Young zeroes in on IFRS for human
resources departments
Human resources professionals need to pay close attention to the ways
International Financial Reporting Standards (IFRS) will affect compensation
plans, training and retention of key resources, Ernst & Young says.
“With IFRS conversion slated for January 2011, it’s time to start thinking about
these crucial issues now,” says Bruce Sprague, Ernst & Young Human Capital
Partner. “In many business sectors, IFRS will change earnings, earnings per
share and financial position; which will impact the entire organization.”
Incentive thresholds might be met (or become unachievable) as a result of IFRS
adoption simply because reported metrics could change, including those used for
incentive compensation thresholds such as income, revenue and net asset value.
So, where should human resources start? Ernst & Young suggests the following
five key areas to help HR professionals get going on IFRS.
-
Compensation committees will need to work closely with
accounting and management functions to understand the new processes’ potential
impact on remuneration.
-
A shortage of trained IFRS resources is another significant
challenge companies will face. Since comparative data will be required as
early as 2010, companies need to act now. Does your organization have enough
manpower to handle IFRS conversion? Numerous areas of the company, including
information technology, may need additional people on hand, especially over
the next few years. And IT specialists are already at a premium in Canada,
especially those who understand accounting implications.
-
The next generation of accountants and finance specialists
will need to speak fluent IFRS. Universities are adapting their curriculum –
but are companies offering the training required? It’s time to start
integrating IFRS seminars and professional development into the finance
departments of Canadian companies.
-
Human resources committees might also want to develop
succession plans for key IFRS-trained technical resources, and revisit the
company’s compensation strategy. This could help reduce the risk of losing key
finance people.
-
Last but not least – human resources should be working with
their communications counterparts to ensure any HR changes resulting from IFRS
get the talk time they need now, and that everyone understands what’s
happening, and why.
The new standards are quickly becoming the reporting benchmark in many parts of
the world. To date, more than 100 countries either require or permit the use of
IFRS, including Canada. It’s a major change management project that can reach
into all corners of a business. The best advice regarding the timing of the
conversion project is to start as early as possible. |
|
