22WEST
MIDL
ANDS
CO
MP
AN
YG
UIDE
Co
nv
er
ti
ng
pu
bl
ic
se
ct
or
:
wh
yt
he
wo
rk
st
ar
ts
he
re
In
tw
oy
ears
8217t
ime
,m
uch
of
the
public
sec
to
rw
ill
con
ve
rt
to
In
te
rn
ational
Fi
nancial
Re
por
ting
Standar
ds
(IFRS).
But,
as
Mi
ke
McDonagh,
Mi
dlands
audit
sect
or
lead
8211p
ublic
sec
to
ra
t
KP
MG
in
Bir
mingham
explains
,m
anagers
must
star
tw
or
kn
ow
or
face
consequences
The
next
four
or
five
years
will
see
one
of
the
most
fundamental
changes
in
accounting
that
the
public
sector
has
ever
seen.
The
in-
troduction
of
IFRS
over
this
period
will
cre-
ate
both
opportunities
and
challenges
for
the
public
sector
.
The
NHS
will
be
one
of
the
first
areas
of
the
public
sector
to
convert
to
IFRS
account-
ing,
with
all
health
bodies
having
to
prepare
their
financial
statements
in
accordance
with
the
new
standards
by
the
end
of
March
2010,
with
local
government
following
ay
ear
later
.W
hile
2010
appears
to
be
al
ong
way
of
fa
tt
he
moment,
the
lessons
learned
from
the
private
sector
8217s
conversion
highlights
the
need
to
build
in
more
time.
The
private
sector
converted
to
IFRS
between
January
2004
and
December
2006
and,
during
this
process,
it
becam
ec
lear
that
the
task
was
much
bigger
than
antici-
pated
and
frequently
generated
as
ignificant
amount
of
additional
work
as
the
deadline
drew
ever
nearer
.A
sar
esult,
it
is
important
that
the
public
sector
takes
on
board
these
learning
points
to
ensure
as
mooth
and
suc-
cessful
conversio
n.
Based
on
our
and
corporates
8217e
xperiences,
we
have
identified
key
factors
that
must
be
taken
into
consideration.
Firstly
,t
he
time
it
takes.
Planning
is
key
and
the
whole
issue
of
the
conversion
must
be
embraced
by
management
and
cannot
be
seen
as
something
that
can
be
fixed
nearer
the
time.
The
most
successful
conversion
teams
began
working
on
the
project
at
least
18
to
24
months
ahead
of
their
first
IFRS
reporting
date.
This
is
especially
important
when
you
take
into
consideration
the
requirement
of
a
comparative
set
of
accounts.
This
requires
public
sector
or
ganisations
reporting
according
to
IFRS
ay
ear
prior
to
full
implementati
on
in
order
to
provide
a
comparison.
Secondly
,I
FRS
has
brought
ac
onsider
-
able
amount
of
complexity
to
financial
ac-
counts,
both
for
the
results
reported
and
also
the
amount
of
disclosures
that
companies
are
now
required
to
make.
The
sheer
volume
of
IFRS
requirements
means
that
it
often
takes
al
ong
time
for
peo-
ple
to
become
familiar
and
thus
confident
with
it.
This
learning
curve
is
vital
and
must
be
factored
in
at
an
early
stage
or
errors
can
occur
close
to
implement
ation
deadline.
The
third
point
centres
on
the
need
for
ownership.
The
process
of
moving
to
IFRS
is
not
simply
as
eries
of
technical
accounting
changes.
It
is
ac
ultural
transformation
as
much
as
an
accounting
one.
It
is
not
possible
to
have
IFRS
as
ay
ear
-end
top-up
8211i
ti
sm
uch
wider
than
this.
Consideration
has
to
be
given
to
the
im-
pact
that
IFRS
will
have
on
an
or
ganisation8217
s
systems
and
processes,
its
people
and,
ulti-
mately
,t
he
financial
results,
especially
in
re-
lation
to
the
impact
it
will
have
on
the
budg-
eting
for
,a
nd
performance
of,
the
business.
The
final
key
factor
relates
to
the
or
gani-
sation8217
sl
eadership.
All
successf
ul
projects
had
an
ominated
leader
who
was
given
the
appropriate
amount
of
time
to
ensure
that
the
project
was
kept
on-track.
It
does
not
need
to
be
af
ull-time
job,
but
it
is
not
something
that
can
be
viewed
as
simply
an
add
on
to
someone8217
s,
no
doubt
already
busy
,s
chedule.
This
task
must
be
given
due
considera-
tion,
commitment
and
time,
together
with
proper
priority
within
the
or
ganisation.
KPMG
8217s
public
sector
audit
team
has
been
in
discussions
with
av
ariety
of
public
sector
or
ganisations
to
discuss
what
will
be
needed,
the
timing
of
the
conversion
and
what
they
have
to
do
to
successf
ully
prepare
for
it.
From
these
discuss
ions,
it
is
clear
that
changes
made
by
the
Tr
easury
(for
central
government
and
the
NHS)
and
the
Joint
Committee,
that
draws
up
the
local
govern-
ment
statement
of
recommended
practice,
to
the
implementa
-
tion
timetable
has
raised
questions,
leading
in
turn
to
ad
elay
in
pri-
oritising
this
is-
sue
on
their
agenda.
As
ar
esult,
many
public
sector
or
ganisations
have
not
yet
begun
to
carry
out
any
work
on
preparing
for
this
conversion
.
This
will
need
to
change
quickly
if
the
conversion
is
to
be
successf
ully
delivered
within
the
timetable
set
out.
The
current
timetable
varies
with
dif
fer
-
ent
areas
of
public
sector
coming
on
board
at
dif
ferent
times.
Central
government
departments,
NHS
foundation
trusts
and
the
NHS
are
all
sched-
uled
for
their
conversion
to
occur
in
the
fi-
nancial
year
2009/10,
with
local
government
scheduled
to
occur
in
2010/1
1.
However
,t
he
education,
charities
and
so-
cial
housing
sectors
are
currently
awaiting
confirmation
of
their
final
timeframe
of
con-
ver
gence
of
UK
GAAP
with
IFRS.
It
is
obvious
from
the
private
sector
conversions
that
with
the
right
approach,
a
smooth
conversion
to
IFRS
is
achievable.
Our
experience
tells
us
that
this
new
ac-
counting
framework
is
very
dif
ferent
to
the
familiar
UK
GAAP
,a
nd
therefore
the
practi-
cal
challenges
of
implement
ation
should
not
be
underestimated.
Early
consideration
and
planning,
fol-
lowed
by
ap
roject
action
plan
will
be
key
to
achieving
as
uccessful
conversion
within
the
public
sector
.
Now
is
the
time
for
the
public
sector
to
start
thinking
about
the
task
ahead.
Al
lo
w
enough
time
to
do
the
job
pr
op
er
ly
,
wa
rn
sM
ik
e
McDonagh.
Th
em
ost
suc
ce
ssful
co
nv
ersion
te
ams
be
gan
wo
rk
ing
on
the
pr
ojec
t
at
least
18
to
24
mon
ths
ahead
of
their
64257rst
IFRS
re
po
rt
ing
da
te
No
w
is
the
time
fo
rt
he
public
sec
to
r
to
star
t
think
ing
ab
out
the
task
ahead
,s
ay
s
Mi
ke
McDonagh
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