The International Financial Reporting Interpretations Committee (IFRIC) is the international equivalent to the Australian Urgent Issues Group. On 4 September 2003 the IFRIC released a draft interpretation D2 addressing the recognition of changes to a remediation commitment provision. D2 proposes that changes other than the unwinding of the discount should be recognised as an adjustment to the cost of any associated asset.

Act now - Questions you should be asking now

KPMG has summarised some of the key technical differences, which in isolation or together have wide ranging consequences. However, conversion to IFRS is much more than an accounting compliance issue for Australian power and utility companies. It poses a number of significant and complex questions that power and utility business leaders need to consider now.

Questions such as:

* What are the significant impact areas for each business and how complex will it be to convert to IFRS?

* How will IFRS impact reported business performance and how will this impact be communicated effectively internally and to the market at large?

* What expertise and resources will be needed to ensure a successful conversion?

* How should conversion to IFRS be managed?

* What are the potential benefits from converting to IFRS?

Power and utility companies also need to note that there are general changes arising from the introduction of IFRS that will impact on their results. These changes are wide-ranging and include requirements relating to financial instruments and impairment of assets, accounting for employee options and defined benefit plans (only some of which are discussed here). All of these proposed changes require immediate attention.

KPMG provides both the insight into the strategic implications of converting to IFRS as well as the practical support needed for a smooth transition. Their integrated approach uses tested methodologies and tools such as their in-house developed 'Quick Scan'.

This is a high level analysis that provides a qualitative assessment of the impact IFRS conversion will have on a company's business activities, resources and financial statements.

KPMG says Quick Scan provides a powerful communication tool that can be used within the organisation to explain the impact of IFRS conversion in a clear and concise way.

The timeframe to implement IFRS is tight. Being in a position to publish IFRS financial statements for 2005 means that work needs to start now.