{"id":1986,"date":"2014-12-09T15:24:06","date_gmt":"2014-12-09T15:24:06","guid":{"rendered":"https:\/\/www.peeriosity.com\/shared-services\/articles\/?p=1986"},"modified":"2022-08-11T22:05:26","modified_gmt":"2022-08-11T22:05:26","slug":"methods-to-convert-financial-statements-to-local-statutory-gaap","status":"publish","type":"post","link":"https:\/\/www.peeriosity.com\/shared-services\/articles\/2014\/12\/methods-to-convert-financial-statements-to-local-statutory-gaap\/","title":{"rendered":"Methods to Convert Financial Statements to Local Statutory GAAP"},"content":{"rendered":"

For companies who are conducting business in multiple countries, defining processes globally, regionally, or locally is an ongoing opportunity to create efficiencies and take advantage of scale.\u00a0 However, to meet legal and regulatory requirements, many financial statement processes require both a global view and one that complies with local statutory laws.\u00a0 In this case, the opportunity that exists is to create a conversion process that is transparent, clearly defined, and as consistently applied on a country-by-country basis as possible.\u00a0<\/span><\/p>\n

Recently the Senior Director of Accounting Services at a member company wanted to understand the method others used to covert financial statements to local statutory GAAP.\u00a0 Using Peeriosity\u2019s iPollingTM<\/sup> capability, they were able to quickly get detailed responses from peers who faced the same challenge.<\/span><\/p>\n

As background, the member company\u2019s system environment is advanced, with a single instance of SAP that is primarily configured to drive compliance with US GAAP<\/a>. This means for the other 50+ countries and 250+ legal entities the company operates in they need to adapt SAP US GAAP financials to local GAAP. \u00a0Currently, the company has no specific standards or global guidelines, so each country is on its own to determine the best method.\u00a0 As an added complexity, the resulting records are often used differently. For example, they may or may not be formally filed, be subject to an independent audit requirement, or be used as a basis to support a local tax compliance package.<\/span><\/p>\n

Peeriosity\u2019s iPollingTM<\/sup> results provided answers that were clear and actionable, with the ability for all respondents to easily communicate with peers to fully consider alternative approaches.\u00a0 The results indicate that 36% of member companies maintain a parallel set of local GAAP accounting books and records to meet local requirements. \u00a0Another 29% of companies make statutory adjustments with a special ledger\/coding structure within the same ERP to derive local statements, with 21% having conversion processes that vary by country.\u00a0\u00a0 No member companies indicated that they rely on assistance from a third-party accounting firm to complete the conversion.\u00a0 Here are the details:<\/span><\/p>\n

\"companys'<\/p>\n

The second iPollingTM<\/sup> question was designed to understand the metrics used to monitor performance with the conversion process (or processes) used.\u00a0 For 29% of companies, the most effective metrics<\/a> are used to measure the timeliness for meeting filing and reporting deadlines.\u00a0 For 50% of the responding companies, few or no valuable metrics currently exist to monitor this process.\u00a0 These results highlight the opportunity that exists at many companies to create and implement effective performance measures for this process.<\/span><\/p>\n

\"ipolling<\/p>\n

Here are few of the comments added by iPollingTM<\/sup> respondents:<\/span><\/p>\n