 "Christoph Meilen, Senior Manager Advisory & Consulting, Deloitte Luxembourg")
An interview with Christoph Meilen, Senior Manager Advisory & Consulting, Deloitte Luxembourg
Since 2001, more than 100 countries have adopted the International Financial Reporting Standards (IFRS), and a number of other economically important countries have programmes in place to combine their national standards with IFRS. In many banks based in Asia, for example, preparations are currently being made for IFRS implementation that will no doubt involve several unexpected challenges. However, there is a way to avoid a good deal of the stress and difficulty involved and, as far as IT is concerned, the wheel does not have to be reinvented.
With 8 years of experience with IFRS, Europe provides a good benchmark for countries who have recently begun or are thinking about implementing the accounting standards.
We talked to Christoph Meilen, an experienced consultant from Deloitte IFRS Group, who has been involved in many IFRS implementation projects since 2005.
In recent years, you have supported several banks in implementing IFRS at the IT level. In your opinion, what are the key factors that characterise an IFRS-compliant IT solution?
Data quality in core banking systems is one key factor for successful implementation of IFRS software packages. Accurate contractual information for financial instruments as well as sufficient market and static data lay the foundation for all IFRS-compliant results such as cash flows, the effective interest rate and fair value calculation. During implementation periods, pragmatic solutions have to be found on a daily basis to fill the gaps in the data or because of poor data quality in the existing data warehouses.
What should banks look for when selecting a suitable IFRS solution?
Even though there are many software packages that promise to provide a comprehensive, integrated solution, only very few packages deserve to be called comprehensive.
Apart from a calculation engine, which computes IFRS figures, a state-of-the-art software package has to feature an accounting engine that posts these figures in compliance with the applicable standards. The flexibility to customise either the chart of accounts or the accounting rules is one of the core requirements European clients have when applying standards. Parallel bookkeeping systems for IFRS and local-GAAP is another crucial factor in the selection process for a software vendor.
What other criteria should be taken into account when choosing a software vendor?
Successful implementation projects make high demands on the implementation team and their underlying skills. Functional questions often take centre stage in the project and can influence delays or ‘realisation in time’ and therefore ultimately determine whether the project will succeed or fail. Similarly, a financial institution, a software vendor and a potential implementation partner all need to provide appropriate functional know-how to keep the project going in the right direction. Along with a team of functional experts, standardised implementation methodologies constitute an important element of an effective IFRS implementation project.
