Case Study

A Leading Global Consumer Products Company’s Journey from U.S. GAAP to IFRS

SUMMARY/OVERVIEW

Transforming Compliance Risks Into Opportunities

What happens when the selection of accounting standards for a company’s financial statements takes an international turn?

Global companies often face additional tax and accounting challenges due to their unique footprint. The location of the company’s corporate headquarters — especially when the company maintains operations in more than one country — can dictate the selection and implementation of a company’s accounting standards. Converting from one accounting framework to another is a complex process that can strain a company’s day-to-day operations and resources. In these situations, assistance from an external provider can provide the expertise and resources needed for a smooth transition.

By engaging BDO professionals, one company achieved compliance, augmented its workforce, and developed more efficient and accurate financial reporting while improving business operations and reducing costs.

Key Takeaways

Converted the parent company’s financial statements from U.S. GAAP to IFRS

Streamlined the company’s workforce and reduced operational costs

Empowered the company to handle future IFRS filings internally

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The Challenge

A Potentially Daunting Task

For one multinational consumer products company, complying with the statutory requirements of the company’s home country was part of doing business. But having a strong U.S. presence while being headquartered abroad raised significant compliance and financial reporting risks. 

After being out of compliance for several years, the company recognized the need for change. Transitioning from U.S. GAAP to International Financial Reporting Standards (IFRS) seemed the best option for meeting compliance obligations. But internal teams lacked technical knowledge and capacity to manage the conversion while sustaining day-to-day operations. 

The path forward appeared clear, but the steps required for the company to achieve its goals seemed overwhelming. 

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The Approach

A Big Picture Approach to Compliance and Conversion 

To overcome its challenges, the company needed to develop processes that addressed immediate compliance issues and paved the way for future success — without overwhelming its staff. 

For a task with such a significant company-wide impact, it was crucial for leaders and BDO to understand the company’s current operations before taking any action. Our team’s approach helped provide an accurate and comprehensive picture of the work involved before, during, and after the conversion. 

In addition:

  1. Initial Assessment: BDO’s team began with a scoping analysis of the company’s accounting functions and financial statements, which included using a U.S.-GAAP-to-IFRS checklist to identify areas of concern. 

  2. Account Review: Performing a thorough review of trial balance accounts and transactions helped ensure the completeness of the assessment.

  3. Collaboration with Experienced Advisors: The company also worked with IFRS professionals from BDO’s Professional Practice Group to address all relevant accounting and financial reporting considerations.

  4. Mitigation: BDO’s team flagged potential issues and collaborated with the company’s auditors to resolve any uncertainties in accounting or financial reporting positions.

  5. Planning: Conducted a detailed review of trial balance accounts and transactions to help ensure completeness of the assessment and plan for future IFRS compliance and filings. 

The company’s approach prioritized compliance and accuracy during its conversion from U.S. GAAP to IFRS, leading to other company-wide successes.

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The Results

Building Strength and Resilience with Trusted Advisors

With guidance and assistance from BDO’s team of experienced professionals, the company realized several key benefits during this complicated process, including:

  • Compliance

    The company is now fully compliant with statutory reporting requirements of its headquarters country, avoiding potential tax penalties and fines.

  • Workforce

    The company originally planned to hire six to eight full-time employees who would be dedicated to IFRS reporting. By leveraging the BDO team’s IFRS experience instead, the company significantly reduced operational costs associated with the conversion.

  • Audits

    The new IFRS financial statements passed audit scrutiny, eliminating the need to hire a special project team.

  • Future Readiness

    BDO’s team provided a template and conversion path workbook, enabling the company to manage future IFRS filings internally with minimal external assistance.

BDO’s work with this client demonstrates how strategic collaboration and guidance with accounting and finance professionals can convert challenges into opportunities for lasting improvement. The company not only achieved a successful conversion to global reporting standards but also streamlined operations and built a foundation for ongoing compliance. 

BDO's experience in international financial reporting standards was instrumental in helping this company achieve compliance and streamline their reporting processes. Our tailored approach helped to ensure statutory compliance, leveraging their workforce and preparing them for future IFRS filings and compliance.
Matthew Coker
Assurance Practice Leader, Accounting Advisory & Outsourcing - Accounting & Reporting Advisory Services

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