RegulationCorporate GovernanceIFRS ‘not just a numbers game’ finds PwC

IFRS 'not just a numbers game' finds PwC

Survey reveals IFRS conversion has had huge impact on the way fund managers perceive companies and the investment decisions they make

Conversion to international financial reporting standards is ‘not just a
numbers game’ and is having a large impact on fund managers’ investment
decisions, according to a joint PricewaterhouseCoopers and MORI survey.

The overwhelming majority (76%) of fund managers questioned, almost half with
funds under management of £50bn, called the change to IFRS ‘significant’.

The study, entitled IFRS – The Investors’ View, questioned 75 fund
managers and also found that, even at this early stage of adoption, almost half
(47%) said the impact of information reported under IFRS had directly influenced
their investment decisions.

Some 13% said that the impact had influenced them to invest in a specific
company, nearly a third (29%) said that the conversion had influenced their
decision to disinvest from a company. A a further 21% said IFRS had influenced
them not to invest.

When asked how much of impact IFRS has had on their perception of a company’s
value, 24% said ‘a great deal’ or ‘a fair amount’.

A PwC statement said that this figure was ‘higher than expected, particularly
at this stage, with the first final statements under IFRS not appearing until
early 2006, and also given that many held the view that a change in accounting
standards should not affect the value of a company’.

Ian Dilks, head of IFRS conversions at PwC said: ‘Commentary around IFRS, the
largest change in accounting in decades, has implied that the efforts to convert
to the new standards are little more than a numbers game, with an enormous
amount of time and resource producing very little change to a company’s figures.

‘Clearly, fund managers who are at the sharp end of investment
decision-making, do not agree. Although it’s early days, they already see IFRS
as having an unmistakable impact on their investment decisions.’

The study found that the majority of fund managers said they understood the
implications of IFRS. Some 84% said they know a great deal or a fair amount
about the new standards and a similar proportion also felt very or fairly
confident in their understanding of the impact of IFRS on the companies they
invest in.

However, understanding and confidence levels varied – only 16% said they were
very confident they had a full understanding and 13% said they were not
confident that they knew a great deal about the impact of IFRS on the companies
in which they invest.

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