Case Studies

Revising procedures so as to comply with IFRS reporting requirements

Background

Our client, a natural resources group quoted on the London AIM market, had difficulties with interpretation and adoption of International Financial Reporting Standards (IFRS).

Appointment

Paul Pascan was appointed by the client to thoroughly review the group’s financial procedures and to ensure correct implementation of reporting requirements using IFRS within the group’s consolidated and subsidiary financial statements.

Investigation

Paul identified gaps in processes and documentation which caused the problems and put forward a plan to bring all accounting valuations and procedures to the required standards of completeness and quality. Problems had arisen from valuation issues (assets/liabilities and contractual arrangements) rather than major problems with the source information and ledgers, which were generally sound.

Implementation

A formal template was designed to capture information required for producing individual and consolidated financial statements. An Excel consolidation model was introduced to control and record historical information relating to past acquisitions, investments and debt valuations. This also acted as a checklist for the valuation and contractual issues previously omitted.

Financial statements were rebuilt and appropriate adjustments made to the prior year information shown in the next year’s accounts. The consolidation model supported the consolidated financial statements which were prepared by us in Word prior to submission to the printer.

Accounting treatment of the Group’s acquisitions and minority holdings was re-examined as was relevant contractual documentation. The formal consolidation process was also used to ensure full compliance with IFRS reporting requirements.

Paul liaised with the board, the auditors and the group’s tax advisers to ensure that all parties were comfortable with the results and disclosures to be made.

Follow up

Paul was also asked to assist with the preparation of subsequent interim and final financial statements to ensure that correct processes were followed. This exercise also included training the Group’s new finance team in the use of the consolidation model and the interpretation and treatment of several complex IFRS valuation and disclosure requirements.

A training day was organised for the full board so that Paul could provide them with an insight into the valuation and disclosure issues required by reporting under IFRSs going forward.

Ongoing work

In 2012 Paul was asked at short notice to prepare the final 2011 and interim 2012 financial statements following the departure of key finance personnel. The timetable was met.

For 2013 and 2014, six years after the initial introduction, Paul remains engaged with the Group to provide support for the next stage of development.