FDs and investors divided over IFRS

In two separate pieces of research PricewaterhouseCoopers found that while
fund managers felt that IFRS had improved transparency and aided investment
decisions, FDs believed the new standards had complicated accounts and placed an
unnecessary drain on resources.

In a recent MORI poll of 93 FTSE 350 finance executives, PwC found that 85%
of the respondents felt that IFRS had made their accounts more difficult to
explain. Over a third of the finance directors (40%) said IFRS was unhelpful to
the board.

The FDs also bemoaned the cost of the exercise, with some companies spending
more than £1m on the transition. Other companies had to fork out at least
£500,000 to implement the standards.

Kevin O’Byrne, FD of FTSE 100 group DSGI and one of the most vocal critics,
summed up these feelings. ‘Anything that adds cost and complexity to the
business is not welcome,’ he declared.

In an earlier poll of 75 fund managers, responsible for funds worth more than
£2 trillion, the view on IFRS was the complete opposite.

More than 66% of the fund managers said the standards had improved company
reporting, while 59% welcomed the introduction of fair value accounting. More
importantly, one in three fund managers polled said they had changed investment
decisions because of IFRS.

Ian Dilks, PwC’s IFRS conversions leader, put the difference in opinion down
to conversion fatigue among FDs.

‘They [FDs] have borne the cost in terms of cash and human resources and
clearly recognise there’s still much more to do,’ Dilks said.

Investors had been more enthusiastic about IFRS because they were ‘more
likely to have seen the benefits of greater disclosure and international
comparability of corporate results’ and didn’t have to incur the costs of the
transition, or struggle with the complex interpretations of the standards.

FDs will be encouraged, however, by a promise from the International
Accounting Standards Board this week that it would issue no new major standards
before 2009.

The standard-setter said it had announced this timeline to provide companies
with a period of stability. The IASB said this would ‘benefit the marketplace’
without curtailing the IASB’s convergence discussions with the US’s Financial
Accounting Standards Board.


FTSE 100

Barclays has avoided a possible $1bn (£538m) hit for its involvement with
Enron. The banking group was facing claims from Enron shareholders who filed a
class action against Enron, its banks and former executives. Barclays had
performed investment banking work for Enron. In a statement Barclays said:
‘Barclays received an order from the US District Court for the Southern District
of Texas Houston Division, which has dismissed the claims against Barclays in
the Enron class action’.

FTSE 250

MFI said that its revenues for the six months to 10 June had plunged 11.8% to
£597.1m, but promised that the business was on a much sounder footing than a
year ago. Last year, reports said that MFI was at risk of breaching its banking


Richard Ainsworth-Morris, former CFO at Betonsports is still seeking £100,000 in
unpaid fees and share options from the internet gambling company, nearly five
years after leaving the company. His allegations emerge as BetonSports British
chief executive David Carruthers was arrested last week. Carruthers is currently
being investigated by the FBI.

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