During 1999, your firm sent brochures and other information to clients in antici

Question

During 1999, your firm sent brochures and other information to clients in anticipation of the adoption of international Financial Reporting Standards (IFRS). In addition, your firm offered several workshops to familiarize your clients with upcoming changes. Now, the new standards have been adopted and must be followed. This year, your clients are receiving their first set of financial statements prepared under the new requirements. Korlla has been a client of your firm for more than 10 years. She has always been pleased with your firms’ preparation of her financial statements. This year, she has been given statements that seem totally different, and she finds that very upsetting. A recent visit from Ms. Korlla did not end well while in your office, she ranted, “What is this? I can’t even make sense of the items on my own balance sheet!” You tried to explain some of the most significant changes to her, but she couldn’t be appeased. “I can’t even recognize my own financial statements anymore! What’s happening? It’s almost un-American, “she griped as she stormed out of your office. Write a business letter to calm the client.

Explanation / Answer

Ms. Korlla,

ABC Company,

Preparation of Financial Statements under IFRS

This is in regards to the financial statements for the 2015. We understand your concern regarding the adoption of new accounting standards in the preparation of financial statements for 2015. To ensure compliance with IFRS, we have been conducted regular workshops whereby the accounting executives of our clients were informed and trained on the requirements of new accounting standards. The basic objective behind the implementation of these standards is to bring uniformity in the presentation/disclosure of financial information to be made available to the various stakeholders. This is particularly true in case of companies having operations in multiple countries/geographies. Compliance with IFRS will reduce the complexities involved in following two different standards (US GAAP and IFRS). It will become easier for investors in different countries to understand and review the financial statements prepared with the use of a single accounting standard as IFRS is getting adopted by companies throughout the world. While, there may be some issues in the initial phases of transformation from GAAP to IFRS, the benefits associated with such a conversion would be numerous. Further, compliance with IFRS is mandatory and we cannot keep following the traditional accounting standards.

As a special gesture, we have decided to organize another training session on IFRS for 2 days in the upcoming week without any charges for your company. Additionally, we would be more than happy to assist you on any IFRS matter/issue on which you require further clarification.

We would, therefore, request for your cooperation and understanding in the concerned matter.

Regards

XXXX,

Director,

XYZ Accounting Firm

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