IFRS update spring 2006 – unfinished business

In association with PwC

The world’s fastest-growing economy has placed IFRS at the centre of its
efforts to continue growing and, more importantly, appease inward investors.

Access IFRS – PwC’s IFRS
resource centre

Given China’s size and potential, this is quite a moment, perhaps even a
watershed that can only be surpassed when the US regulators finally say they are
happy to have IFRS used on Wall Street. It means that IFRS could be the means by
which an economic monster can make itself credible.

But our piece on China also sounds a note of warning. There is still some
work to do before China comes fully into line with international standards.

Still more work? The phrase could be used to give a theme to this latest
issue of the IFRS update. As our articles show, France continues to be fractious
over standards on derivatives.

Argument still rages around the second phase of IFRS3 on business
combinations, and while there have been improvements in comparability, there are
still areas where greater disclosure would be welcomed.

In terms of a health check, it’s difficult to conclude with absolute
certainty that international standards are fit for purpose ­- yet.

What this issue highlights is that an immense amount of effort has already
been invested in IFRS. But although the 1 January 2005 debut is long behind us,
IFRS remains something of work in progress.

Those of you at the sharp end ­- struggling with implementation and taking
part in IASB consultations -­ will not need to be told this. It’s as plain as
the book of standards that threatens to put your back out when you lift it.

Our feature on IFRS for AIM-listed companies and SMEs highlights the volume
of work still to be done, as do the fresh difficulties caused by pension
deficits for those in the market for acquisitions.

IFRS, in short, can be a headache. But there are benefits. Some are already
realised, some are still some way in the future.

Related reading

Fiona Westwood of Smith and Williamson.