International Financial Reporting Standards
International Financial Reporting Standards (IFRS) represent an essential article that must be observed by any company to ensure organized activities. Moreover, it provides international organizations to be as transparent and consistent as possible in their activities. The basis of this study will be an article by Schultze entitled “The SOX compliance journey at Trinity Industries,” which focuses on the importance of designing, implementing, and testing internal controls. This work aims to determine whether Trinity complies with international financial reporting standards. In addition, it will also consider how the organization aligned functionally with both efficiency and effectiveness of controls through the use of current audit and internal control standards.
Change
The first item that will be investigated in the framework of this report is the implications of a change related to compliance with accounting standards. It is worth noting that changes are a necessary aspect, as they allow managers to adapt to constantly transforming external conditions and to achieve strategic goals (Hickman & Silva, 2018). The key implications of accounting standards are poor security and performance of documents. Also, quick changes in the industry slowdown transformations in the main standards. The article by Schultze (2011) states that one of the company’s problems is a “general lack of process and control documentation and evidence that controls had been performed” (p. 91). Moving from GAAP to IFRS makes it crucial to follow all the latest changes. Generally accepted accounting principles are similar worldwide, and they do not take a lot of time to adjust to the techniques in different counties. However, international financial reporting standards are not identical around the world, and the standard requires more time to understand other accounting languages and technology.
Improve
As already mentioned, the organization under study has some problems that are associated with monitoring the implementation of changes. This aspect is necessary to gain an understanding of which actions have the most significant effectiveness and which can negatively affect the activities of Trinity. Therefore, one of the ways to change the situation was the introduction of a self-assessment process that would increase the accountability of the organization. Moreover, managers should pay more attention to accounting workers and ensure that they have enough rest to stay motivated and control one of the most important departments in the organization.
Standards
The following important aspect of the organization’s activities is the mandatory adherence to standards. It is important to emphasize that with the introduction of new changes in the company, additional requirements arise, which are of no less value. Consequently, one of the standards that are necessary for consideration in the company becomes a standard concerning leadership. This is due to the fact that the changes affect not only the company’s activities but also its employees and all interested parties. A successfully tested IFRS standard in Europe and Asia can affect Trinity positively as the improves in security can allow to store important accounting documents and avoid financial risks. There is the introduction of a new auditing process and makes transactions readily available for testing (Schultze, 2011). This is supported by changes related to the internal control of the organization.
Role
The last critical element is the consideration of infrastructure’s role in supporting a compliance project like IFRS. Hence, regarding Trinity’s governance infrastructure, a steering committee was introduced, which monitors and controls all changes in the company. Source emphasizes that it participated “in screening proposals for organizational change initiatives such as system upgrades or process improvements” (Schultze, 2011, p. 106). Further, initially, Trinity had a decentralized IT infrastructure, which was settled by creating an IT control environment, in which the company resorted to using several IT organizations. Lastly, this kind of built process infrastructure requires more attention and changes, as it implies too much information and actions to control.
References
Hickman, C. R., & Silva, M. A. (2018). Creating excellence: Managing corporate culture, strategy, and change in the new age. Routledge.
Schultze, U. (2011). The SOX compliance journey at Trinity Industries. Journal of Information Technology Teaching Cases, 1(2), 91-113. Web.