The U.S. Conversion from GAAP to International Financial Reporting Standards (IFRS) should take place in 2013. But if financial firms want to be ready, they must start preparing now, says Ernst & Young.Calling it the most significant financial/accounting reform since Sarbanes-Oxley, Ernst &Young says the standard will impact all facets of financial service firms, not just accounting.

U.S. will become one of the last countries to adopt the worldwide accounting standard when the SEC implements it. IFRS is already used in the European Union, which adopted it in 2005, Hong Kong, Australia, Malaysia,Pakistan, India, Russia, South Africa, Singapore and Turkey. As of March 28, 2008, about 75 countries require the use of IFRS or some form of modified IFRS, according to reports. Large financial organizations in the U.S. are already starting to do impact assessment to understand what a conversion will mean, says Lisa Filomia-Aktas, partner, financial services accounting advisory services at Ernst & Young.

"IFRS will also impact areas of a business such as product development, and compensation: you may have a long-term incentive plan based on financial targets, and these might change because of the new accounting standard," she adds. From a technology standpoint, IT departments need to get involved early on, Filomia-Aktas contends.

"They need to gather new data, and figure out where to capture data. They need to ask themselves whether they have the same system globally. Or do they have 30 different calculations and are going to have to figure out how to change each one?"

In terms of technology platforms, "Firms also might not want to start building something new in the next couple of years if it's not compatible with IFRS," she adds.

Key initiatives or projects that are likely to be significantly impacted by IFRS, according to Ernst & Young, include:

- Shared-service center deployment - Global enterprise resource planning implementations - Trial balance/chart of account redesign - Global finance transformation (process standardization) - Global policy and procedure development/deployment - Performance management and management information upgrades

Overall, "Firms need to have enough understanding of the major changes, and look at what the overall costs of the initiative are," Filomia-Aktas suggests. "It gets more difficult depending on how disparate your systems are and how many countries you're going to operate in."Calling it the most significant financial/accounting reform since Sarbanes-Oxley, Ernst & Young says the standard will impact all facets of financial service firms, not just accounting.