IFRS and JD Edwards

Although the transition to global IFRS adoption will have its challenges, it will also bring considerable benefits. IFRS is intended to improve transparency and comparability in global markets.

JD Edwards has been addressing IFRS requirements for many years. Oracle customers in more than 100 countries are currently reporting according to IFRS with JD Edwards EnterprieOne and JD Edwards World. In fact, JD Edwards has had customers who have been reporting using IFRS since release Xe for EnterpriseOne and A7.3 for World.

As organizations begin to evaluate the impact of IFRS on their accounting practices, JD Edwards customers will find familiar features that support IFRS, as well as features developed specifically for IFRS. With proper planning in concert with accounting compliance advisors, customers can identify and exploit the features available in JD Edwards needed to assist with the transition to IFRS.

ORACLE JD EDWARDS CAPABILITIES TO SUPPORT IFRS

IFRS-Specific Features

JD Edwards provides support for IFRS requirements. For example:

  • Asset Componentization: IFRS requires that components of an asset that have varying useful lives must be depreciated separately. JD Edwards Fixed Assets support Parent & Child Asset configuration which allows customers to independently depreciate components of an asset.
  • Inventory Costing Methods: IFRS prohibits the use of LIFO. JD Edwards Inventory Management and Advanced Stock Valuation allow you to choose weighted average to support IFRS while still using LIFO for US GAAP.

Dual GAAP Reporting

Companies are still "US GAAP" structured businesses until the cut-over day, but must also value the results using IFRS principles in preparation for the two year comparatives they must file with their first IFRS statements. Dual or multiple GAAP financial reporting will be required during this comparative reporting period of the IFRS transition. Depending on the specific requirement and the company's use of the software, dual GAAP reporting can be managed in a variety of ways. For example:

  • Asset Depreciation: IFRS differences around componentization and carrying basis may result in different useful lives and depreciation methods as compared to GAAP. Customers can define separate depreciation methods for IFRS and for GAAP where the entries are booked to IFRS and GAAP adjustment ledgers.
  • Deferred Tax Asset/Liability classification: For GAAP, deferred taxes may be classified as current or non-current while for IFRS they must be shown as a non-current asset or liability. Customers may choose to use GAAP and IFRS adjustment ledgers to book the transaction to the appropriately classed account. Those ledgers would be included/excluded for GAAP vs. IFRS reporting.
  • Inventory Costing Methods: IFRS prohibits the use of LIFO. Inventory management values inventory based on Weighted Average. Advanced Stock Valuation can be used to create the adjustments to LIFO. Customers may choose to stripe the Advanced Stock Valuation adjustment accounts as GAAP adjustments using account cateogry codes. For GAAP reporting, include the GAAP striped accounts, while for IFRS reporting those accounts would be excluded.

IFRS Migration Path

After the comparative period, given the options for dual GAAP reporting, customers have an appropriate path to get to IFRS only reporting. Considerations at the point of migration include the business response to IFRS and the evolution of the regulatory environment.

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