With the International Financial Reporting Standard (IFRS) becoming a reality, Jet Airways plans to upgrade its enterprise resource planning (ERP) system from SAP R/3 to SAP ECC6. “Currently, we are using SAP R/3, which is not in compliance with IFRS norms. We will first migrate to SAP ECC6 and based on the auditing requirements, corresponding changes in the accounting system will be made,” says RN Moorthy, general manager, IT at Jet Airways.
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Jet Airways hired an external auditor to analyze the existing environment (financial reporting based on Indian standards) and recommend changes in the internal financial processes to adhere to IFRS compliance norms and implement SAP ECC6.
Jet Airways’ information technology (IT) spending for 2011-12 will range between 1% and 1.5%of its revenue, according to Moorthy. The company has a 10-year business transformation and IT services agreement with IBM, which will implement SAP ECC6 for IFR compliance in consultation with the external auditors.
Jet Airways is covered under the first phase of IFRS compliance, which requires the companies listed on NSE and BSE, having a net worth of more than Rs 1,000 crore, to meet IFRS compliance norms by April 2011. Hence, Jet Airways’ top priority for 2011 is to focus on IFRS compliance by deploying SAP ECC6.
“The first quarter of 2011 (January to March) will be focused on IFRS compliance with migration to SAP ECC6. We will be IFRS compliant by the start of 2011-12. However, actual transactions may happen in May or June 2011, based on how the financial year closes,” observes Moorthy.