You dont know what you dont know

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You dont know what you dont know!

• What is the size of your challenge?
• What are the implications?
• What needs to change?
• What are the consequences of not being prepared?

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Christchurch City Council group
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IFRS implementation learning from our
experience to date

• John Mackey

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What have we done so far?

• Agreed to run a pilot project to identify key
  issues with PriceWaterhouseCoopers (PWC) and
  Audit NZ
• Conducted workshops with PWC presenting key
  elements of different standards to key financial
  staff in Council and the trading entities
• Broken into groups or stayed in one group to
  discuss implications

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What have we done so far? (contd)

• Cooperatively documented the issues looking to
  achieve consistency across the group and minimise
  duplication of effortNB. Actions of one member
  can taint the group, eg, held to maturity
  investments
• Actively sought feedback from trading entity
  representatives on their stakeholders and their
  likely issues and the assistance needed to
  address these

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What have we done so far? (contd)

• Jointly prepared a report detailing the issues
  identified so the next stage of the project is
  scoped
• Evaluated the issues from a sector perspective to
  identify the information to be presented at these
  workshops
• Identified over 75 issues that need to be
  addressed

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You dont know what you dont know!

• What is the size of your challenge?
• What are the implications?
• What needs to change?
• What are the consequences of not being prepared?

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Procrastination could be fatal!

• FRS-29, Prospective Financial Information,
  requires adoption for ye 30/6/07
• gt 30/6/05 to be restated to IFRS and 2006
  financial statements

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Procrastination could be fatal! (contd)

• 2007-16 LTCCP will require substantial time input
  in 2005/06
• 2004/05 1st annual report for most under LG Act
  2002 reporting against LTCCP
• Are the next 6 months a window of opportunity?

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Examples of traps for the unwary

• Unable to hedge account because all formal
  documentation not in place at 1/7/05
• May breach your banking covenants, at best
  resulting in extra cost
• May find a CCTOs equity has to be recorded as
  debt

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Examples of traps for the unwary (contd)

• May have insufficient time to make required
  changes to policies, processes and systems (eg,
  treasury policies, treasury management systems,
  hedge effectiveness procedures, derivative
  valuations, etc)
• CCTO may be unable to pay a planned dividend

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Examples of traps for the unwary (contd)

• Your credit rating goes up and you have to record
  a loss!
• You revalue your buildings and have to record
  deferred tax

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How do I get resources and momentum?

• Work with other l.a.s
• Work with CCTOs you have
• Work through SOLGM
• Engage consultants to identify issues

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Things to watch for

• Consultants know IFRS but dont fully understand
  your business
• Danger is in the detailgt have to look at
  additional or modified disclosures revised
  accounting treatments

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Other key learning points

• The more organised you are earlier, the more
  flexibility you have
• Coordination within the group is important
• Dont want to reinvent the wheel in each trading
  entity, or within l.a.s
• Standards are still changing have to watch
  developments

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Other key learning points (contd)

• Identification of stakeholders and their
  requirements is important gives directions and
  determines priorities

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What do I need to do?

• Act NOW!
• Need a project plan covering- Scoping the
  issues and resources- Determining the actions
  required- Obtaining/allocating people and
  resources- Setting responsibilities and
  timeframes- Monitoring milestones

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Any questions?