Parallel accounting according to HGB and IAS/IFRS in SAP

From 2005, capital market-oriented EU companies are obligated to draw up their consolidated financial statement in conformity to International Financial Reporting Standards (IFRS)--earlier International Accounting Standards (IAS) --(EU Regulation 1606/2002 of 07.19.02). For companies already reporting according to US-GAAP, the transition period ran to 2007.

But even companies not directly affected by this regulation plan to produce an IAS/IFRS statement besides an HGB report. Some reasons for this:

• IAS/IFRS group guidelines, with which German subsidiaries must comply
• increasing globalization of the economy and the capital market
• competitive advantages through increased transparency
• shortened closing periods (fast close)
• rating criteria of banks (Basel II) demanding internationally-comparable and transparent reporting

Thus, for example, IAS/IFRS requires companies to conduct financial accounting of results according to segments and regions. This means that companies which already balance accounts for several categories individually will possibly have to undertake additional adjustments for financial consolidation and reporting. It is also necessary that all currency adjustments by subsidiaries be carried out on group equity with an eye to company value. This guideline alone requires an automated process for equity clearing.

It is also necessary to release corresponding comparative figures from the previous year. In practice, this means, for example, that on the basis of the statement for 2003, the opening balance for 2004 is already stated according to IAS/IFRS, so that the requirements of IAS/IFRS are practically already satisfied in parallel for 2004.

Regardless of the company-wide conversion time point, professional support is required, along with a launch design adapted to each company, one which goes beyond narrowly technical considerations. For it's when far reaching effects are recognized early and on all levels that quick implementation becomes possible.

The same applies to implementation in the IT system. In principle, an SAP system offers all required functions for parallel accounting, though adaptations prove necessary in almost all modules and applications, for example:

• Financial accounting: Representation of adjustments
• Asset accounting: Parallel valuation
• Controlling: Reporting by market segments for the notes
• Materials management:Valuation of long-term production orders inventory valuation

There are various solutions for the accomplishment of these tasks. Careful reflection and planning are thus called for at an early stage. Take advantage of the experience and competence of our advisors, who support you in planning and execution of your IAS/IFRS projects with a hands-on approach. It goes without saying that we are also happy to help you with implementation of parallel accounting according to HGB and US-GAAP, or UK-GAAP. So don't hesitate to set up a meeting with us today, without obligation.

In addition, an information sheet is available to you for download. And please don't forget to read our press release on implementation of an IAS/IFRS project at the HARPEN company.