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7-2 Final Project Milestone Four: IFRS Report
ACC675
SNHU
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V a IFRS
Trinity’s compliance with International Financial Reporting Standards (IFRS) has been
examined. The changes that the company would have to make to comply with IFRS has been
identified.
a. Implications of change in accounting standards
Change in accounting standards can have a direct and significant impact on the processes and
approaches that are adopted within the Trinity organization. One of the basic areas of difference is
the adoption of a holistic approach to lease classification. The accountants in the company would
have to rely on their own judgment for the purpose of classifying the leases of the business. The
move to IFRS standards would also have a significant impact on the control activities of the
company. Currently, the controls in the company are designed to ensure compliance with rules
(assumption). The alteration in the underlying logic will force the company to make adjustments
in the control processes. It can also have a major impact on the information system that is adopted
throughout the company. There will be a need for new data, and changes in calculations and
reporting methods will also have to be made (Schultze, 2011,p . 20).
b. Changes to improve internal control compliance
Trinity Industries will have to take a number of steps to strengthen its internal control
compliance. IFRS stresses diverse aspects such as risk management as well as business processes
so that robust internal control can exist in place. The internal audit team needs to possess profound
knowledge relating to the IFRS standard so that the financial statements can represent accurate
details by emphasizing clarity, relevance, comparability as well as reliability (Morley, 2016). A
fundamental change that Trinity will have to make is in its information system so that necessary
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and appropriate data can be captured, which can strengthen the reporting. The inventory
transactions must be captured at a comprehensive level so that they can present complete, timely
and accurate information, and the value of inventory must be correctly captured. The controls
must be thoroughly checked and maintained so that the possibility of gaps can be reduced or
eliminated.
c. Impact of standards on Trinity due to IFRS
Some of the main standards of the International Financial Reporting Standards that will have a
significant impact on Trinity Industries include IFRS 16, which relates to leases and IFRS 10,
which relates to financial statements (Schultze, 2011). It is assumed the company followed US
GAAP, which already has a number of rules pertaining to lease classification. However, while
following IFRS, the accountants would have to expand their knowledge of lease treatment and the
company’s lease agreements so that accurate classification can be made. Similarly, while
preparing the consolidated financial statements, consistent principles need to be followed as IFRS
is a principles-based method (Morley, 2016). a
d. Role of infrastructure in supporting IFRS compliance project
The infrastructure that is in place at Trinity Industries will play an instrumental role in
enabling the company to support the IFRS compliance project. a
• Trinity governance infrastructure – The governance infrastructure that exists within the
company will play a key role in complying with IFRS. Currently, the Information Systems
Audit and Control Association (ISACA) focuses on developing suitable standards while
providing guidance and education relating to information systems governance and audit.
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• Trinity IT infrastructure – The existing IT controls that are adopted within the
organization need to be strengthened so that the general controls can become more
detailed and focused and help to create a more effective internal control environment
within the firm.
• Trinity process infrastructure – The processes that are adopted within the company
need to be made more systematic and methodical so that gaps that may affect controls can
be identified and tackled effectively. The processes need to be made more robust and
consistent. a
References
Morley, M. (2016, December 1). Clarity: The first principle of IFRS (part 1 of 4). TheGAAP.net.
Retrieved December 21, 2022, from https://thegaap.net/clarity-the-first-principle-of-
international-financial-reporting-standards-part-1-of-4/
Schultze, U. (2011). The SOX compliance journey at Trinity Industries. Journal of Information
Technology Teaching Cases, 1(2), 91-113.
