Prepare Your R/3 System Now for the International Accounting Standards Deadline

  • by Dr. Stef G.M. Cornelissen, MBA, SAP Business Consultant, Sperry Partners BV
  • March 15, 2003
Impending deadlines for compliance with the International Accounting Standards (IAS) will require hard work on the part of many accountants and R/3 specialists. The problem posed by IAS is that, in most cases, two or more sets of figures have to be managed because of the differences among IAS, US GAAP, and national fiscal reporting.

Impending deadlines for compliance with the International Accounting Standards (IAS) will require hard work on the part of many accountants and R/3 specialists. By 2005, all companies listed on a European Union (EU) stock exchange have to be in compliance with IAS.1 European companies also listed with an exchange in the United States have until 2007 at the latest. The requirements will affect U.S. subsidiaries of these companies. Non-listed companies should be alert as well. European banks already tend to require IAS compliance in loan applications. (See, "International Accounting Standards (IAS) Grows in Stature," below.)

The problem posed by IAS is that, in most cases, two or more sets of figures have to be managed because of the differences among IAS, US GAAP, and national fiscal reporting. (See, "Examples of Differences between IAS and US GAAP," below.) Time is running out, because in reality, changes have to be in place as early as 2004 to provide a comparable set of figures.

SAP has provided you with two options for complying with IAS requirements. (See, "Pros and Cons of Aligning Your System with IAS," below.) Both of the following methods could require a system overhaul, because prerequisites include a central chart of accounts and fewer controlling areas than many systems have:

  • Special G/L accounts allowing different financial statements based on account selection. For example, a credit is automatically posted to two different G/L accounts, each with its own rate.
  • One or more parallel ledgers in which the alternative values are stored. For example, a credit is automatically posted to ledgers with different accounting principles.

Dr. Stef G.M. Cornelissen

Dr. Stef G.M. Cornelissen, MBA, is an experienced international SAP business consultant from the Netherlands with certifications in FI, CO, and SD. He took part in important international projects involving the large Dutch multinationals. Before specializing in SAP, he worked as a management consultant and was a senior advisor to the Board of Directors of the University of Nijmegen. Stef's academic background is in business administration, economics, and organizational science. He is the owner of Bowstring BV and principal partner at Sperry Associates.

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