The board provides insights that the management may lack. For this reason, experienced and exposed people sit on board. Boards are helped by committees which have technical skills and expertise in the subject matter. For IFRS 9, the audit committee of the board plays a critical role in IFRS 9 compliance.
The board and its committees must provide guidance to management especially the executive team to help navigate rough waters, identify and optimize opportunities, provide timely and reliable financial information to shareholders.
Compliance is one of the key roles of the board.
By now, many, if not all companies that are impacted by IFRS9 have some form of a model to guide compliance. The mandatary IFRS9 compliance date was 1st January 2018. After a year, a lot has so far been achieved.
However, our experience at Summit Consulting Ltd, has been lack of clear strategy in the implementation of the standard. This is because, some boards did not take a leading role in the IFRS9 compliance. The results have been high costs of compliance through trial and error. In banking sector for example, the regulator came up with tight timeless without having prepared the banks. Around July 2017, all banks were required to provide IFRS9 impact on their equity by 1st January 2018. This was a tough requirement since in Europe banks were given three (3) years to transition. They started the conversation in 2015!
Also read: IT audit scope required of external auditors of Financial Institutions
For effective compliance, the starting point in IFRS9 implementation is IFRS 9 readiness assessment. This high-level assessment examines the readiness of the organization to comply with the standard. What is impact of IFRS9 on the Organisation? Who are the board members? What training have they undertaken in IFRS9? Who is driving IFRS9 compliance? How many trainings have all top management team and heads of key departments undertaken as far as IFRS 9 is concerned? Is there an IFRS9 compliance committee at EXCO level? Are there champions for IFRS 9 compliance? Is IFRS 9 compliance a finance issue or a top management issue, in which case it is a permanent feature on the EXCO or TMT agenda?
IFRS9 compliance goes beyond financial impacts to areas like ICT, business model, strategy, operations efficiency and risk management. Departments like HR are critical in IFRS9 compliance. There is need for training all heads of departments to understand and appreciate their roles in the IFRS9 agenda since it is a compliance issue.
