PracticeAuditAudit committees ill-prepared for IFRS

Audit committees ill-prepared for IFRS

Just over one quarter of audit committees are prepared for the adoption of international financial reporting standards in 2005, a new survey has worryingly revealed.

Link: Audit committees – Where to next?

The Audit Committee Institute, sponsored by KPMG, polled 120 audit committee members at a recent roundtable discussion and found that just over a quarter (28%) were adequately prepared for ‘externally focused issues such as communication with analysts, institutional investors and lenders’.

Other findings were equally worrying including 52% of respondents considering audit committees both unaware and ill-prepared for IFRS.

On the positive side, 90% said the revised Combined Code would increase the amount of corporate governance disclosure in annual reports, but just 20% of respondents believe audit committees have the requisite skills, knowledge and resources to fulfil this enhanced role.

Timothy Copnell, director of the ACI, commented: ‘There is a real risk that governance disclosure will become a “boilerplate” exercise. Companies are facing real issues such as the conversion to IFRS and it is important that the right messages are communicated to interested parties such as shareholders, brokers and analysts on a timely basis.’

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