European FDs show support for IASs
European finance directors have shown unprecedented support for the early adoption of international accounting standards, a new pan-European survey has revealed.
Almost four-fifths of the finance directors polled not only support the introduction of global standards but want the option to publish IASs before 2005, the European deadline for the adoption of IASs in cross-border listing.
Of 7,000 European listed companies, 717 CFOs in 16 European countries were surveyed on their views about the European Union’s decision to force companies to start reporting using international accounting standards. The move signifies Europe’s biggest change to financial reporting in 30 years.
Mary Keegan, PricewaterhouseCoopers’ head of global corporate reporting, told AccountancyAge.com: ‘We suspected that the mood had swung, but I was taken by surprise with the results. The strength of opinion strikes me as impressive and this is business telling business. Business is ahead of the regulators. That fits with our picture of things.’
Of the 16 countries polled, it was the UK that showed less support for the move when asked to choose between UK GAAP to IAS, 20% opted for the former. Switzerland showed the strongest support for the change-over.
However, 63% in the UK favour starting to publish financial reports using IAS ahead of the 2005 deadline.
Peter Holgate, UK senior accounting technical partner at PwC, said: ‘Despite the fact that most UK businesses rate their national standards highly, a clear majority of UK CFOs responding to the survey support IAS, recognising it as an important strategic move towards harmonisation.’
The concerns that CFOs raised over the switch to global standards centred around internal reporting systems, human resources and training costs. Finance directors said the main reasons for considering the change to IAS were strategic business considerations, such as international comparability and raising finance.
However, they were worried about analysts’ understanding of the change in performance trends.
Keegan said: ‘Companies recognise the advantages of starting the process and educating the market now. A change in accounting standards does not of course affect the underlying economies of a company, but CFOs are keen to ensure that analysts and investors react positively to a different presentation of the figures.’