IFRS update October 2005 - Introduction

Ever since we began discussing in detail the new accounting rules in early 2003, various pieces of research (including AccountancyAge’s own) have suggested that UK listed companies would not be adequately prepared in terms of groundwork, resource or expertise for the biggest financial switch they would have to make in decades.

Link: Access IFRS - PwC's IFRS resource centre

Fortunately, the two years of panic-ridden build up to the introduction of international financial reporting standards nine months ago seems to have borne fruit. Cynics would have called it scaremongering, realists would say that only by acknowledging a worst-case scenario would (smaller) corporates fully engage.

Of course, there’s more to it than that. Ever since 1 January 2005, the non-execs, finance directors and other board members affected by IFRS have reacted more positively and transparently than many could ever have predicted.

As Peter Wyman, head of regulatory policy at PricewaterhouseCoopers says,
the transition was always going to be a ‘difficult one’ with a huge amount of points to be considered and eventually ticked off, some standards still being under review as well as the massive effort needed to plan for such a switch.

But, as so many of the commentators in our third IFRS management briefing of 2005 suggest, the changeover has, in the main, been approached with the right mindset, advice and careful planning.

‘In 2004 and even at the beginning of the year, the ICAEW and other organisations were running surveys about how companies were slow in taking up and preparing for the full impact of IFRS’, says Wyman.

‘But things have now moved on, companies have just got on with it and now the preparation has been done the large majority have avoided any last-minute panic.’
But as we are only three-quarters of the way through the first year of implementation, and with the results of restated IFRS interims only just creeping through, many believe it is still too difficult to judge the specific impact of the changes.

‘It is too early to say how easy investors have found IFRS accounts to interpret and it will be next spring at the earliest before a clearer picture emerges,’ says Wyman.
But the advice from the profession is that a lack of proven IFRS-driven results should not prevent companies from continuing to strive for high standards.

Between now and the early part of next year companies should persist with their preparations, maintain the highest standards of reporting and educate from the top down. If continual education is the watchword, then this briefing will help you to continue to push the right buttons.

From the impact the new rules are having on interim results and the changing role of non-executive directors to a who’s who of IFRS regulators you will be able to read about the issues and opinions that should be on everybody’s IFRS radar.

And if you are not ready, we have emergency steps you should be taking right now to ensure that you are following the right path to IFRS success.

Even though we are still in the early stages of convergence and annual reports under IFRS are still six months away, UK plc can be proud that it has approached IFRS in a prepared and positive manner. Let us hope that the next phase will be as positive as the last.