Elixir Audits, Chartered Accountants

Framework choice is a decision, not a default. IFRS for SMEs is available and appropriate for many private companies in Ghana, and it is substantially less burdensome than full IFRS. Moving to full IFRS when nothing required it is expensive and nobody thanks you for it.

What drives the choice

Whether you have public accountability, what your lender or investor requires, and what your sector regulator expects. We establish which applies before recommending a conversion, because the most common IFRS engagement we decline is one where the client did not need to convert at all.

The standards that cause the trouble

IFRS 15 on revenue, particularly where contracts have multiple elements or revenue is recognised over time. IFRS 16 on leases, which put station, depot and office leases onto balance sheets that had never carried them. IFRS 9 on expected credit losses, which is where financial services clients spend most of their effort.

The part firms skip

Training your team. A conversion that leaves you dependent on the adviser to prepare next year's accounts has not finished. We build the models and the working papers so your finance team owns them, and we say so in the engagement letter.

Two frameworks

Full IFRS and IFRS for SMEs. The choice is a decision

6 to 12 weeks

Typical conversion, including the opening balance sheet

Handover

Your team owns the models afterwards

Scope

What an IFRS engagement covers

Scoped to what actually applies to you, which is frequently less than a general conversion proposal assumes.

01

Framework assessment

Establishing which framework applies and whether a conversion is genuinely required. Sometimes the answer is that it is not, and we will say so.

02

Gap analysis

Comparing your current accounting policies against the target framework, standard by standard, and identifying what actually changes for your transactions.

03

Conversion and opening balance sheet

Restating comparatives, preparing the opening balance sheet, and documenting each adjustment so it can be audited without argument.

04

Disclosure pack and training

The disclosure notes the framework requires, plus working papers and training so your team can prepare next year's accounts without us.

Process

How a conversion runs

The gap analysis is the phase that determines everything else, and it is quoted separately for that reason.

Talk to your auditor earlyA conversion the auditor sees for the first time at year end will be challenged at year end. Where we are not your auditor we will coordinate with them through the work, which shortens the audit considerably.

Framework assessment

Which framework applies, and whether conversion is required at all.

Week 1

Gap analysis

Policy by policy against the target framework, with the transactions that actually change identified.

Weeks 2 to 4

Conversion

Restatement, opening balance sheet and adjustment documentation.

Weeks 4 to 9

Disclosures

The notes the framework requires, drafted rather than listed.

Weeks 9 to 11

Training and handover

Working papers, models and a session with your finance team so they own it.

Week 12

Engagement

Fees, timing and who does the work

Fee basis

Fixed fee per phaseGap analysis quoted separately. The conversion is quoted once we know what actually changes.

Who does the work

A manager, partner reviewedWith the partner on framework choice and on any judgement adjustment.

Timeline

Six to twelve weeksDepending on the number of standards affected and the state of the underlying records.

Indicative only. Every fee is quoted in the proposal, before any work starts, and held unless the scope changes.

Questions

Questions on frameworks and conversion

Do we have to move to full IFRS?
Not necessarily. IFRS for SMEs is available and appropriate for many private companies, and it is substantially less burdensome. The framework is driven by whether you have public accountability, by lender or investor requirements, and by sector regulation. We establish which applies before recommending anything.
What triggers a conversion most often?
An investor, a lender or a regulator asking for it, or a group parent requiring reporting on its own basis. Occasionally a business converts voluntarily because it intends to raise funds, which is sensible if the timing allows.
Which standards cause the most work?
IFRS 15 on revenue where contracts have multiple elements, IFRS 16 on leases, and IFRS 9 expected credit losses for anyone lending. For most commercial businesses IFRS 16 is the largest single change because it puts leases on the balance sheet.
Can you convert us and then audit the result?
No. Preparing the conversion and then auditing it is a self-review threat. Where we are your auditor we can advise but not prepare, and where we do the conversion you will need another firm to audit it. We are clear about which role we are taking before we start.
Will our team be able to maintain it?
That is the point of the last phase and it is in the engagement letter. If a conversion leaves you dependent on the adviser to prepare next year's accounts, it has not finished.

Related

Read before you brief us

ServiceStatutory audit under the Companies ActServiceOutsourced finance functionServiceValuation and due diligence

Next step

Tell us who is asking for IFRS, and why.

That single answer usually determines the framework, the scope and the timetable, and occasionally it establishes that you do not need to convert at all.

Request an IFRS scoping call Speak to a partner

Contact

+233 53 362 2433 info@elixiraudits.com

1 Alex Nkrumah Street, Airport West, Accra

Also under Advisory

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