Symonds: ‘Europe must unite on IAS’

Link: Read the full interview with Jonathan Symonds

In an interview with Accountancy Age ahead of taking over as chairman of The Hundred Group of Finance Directors next month, Jonathan Symonds said he was talking to colleagues in other countries about how to counter the problem of ‘fragmentation’.

‘Some European companies have got real issues with it,’ he said. ‘I’ve had calls from the CFOs of Nestle and Philips saying how can we better coordinate our concerns about specific issues in international accounting standards, and I think we are going to have to find ways of linking up. Fragmentation is a big issue now.’

The European Commission requires all listed companies to adopt IAS for year ends after 1 January 2005. Symonds revealed that The Hundred Group, which comprises the finance directors of the 100 largest companies listed on the London Stock Exchange, has set up a committee to address IAS issues.

He said that, although he did not expect to see the creation of a pan-European body for finance directors, The Hundred Group had to widen its remit. ‘It now appears that a number of major European multinationals have started saying that maybe the voice should now be heard on a pan-European scale. And so it looks as though we could elevate The Hundred Group voice to a slightly wider scale.’

Symonds, who is CFO of pharmaceutical giant AstraZeneca, said the most problematic standard was IAS39 on derivatives. In recent weeks, European banks have said they want to continue using favourable accounting treatments for derivatives, a practice that would be stopped by the standard.

The insurance sector is also lobbying for changes, because it fears that it will cause more volatility from year to year. The European Commission is also understood to have concerns about the proposals, which the IASB want to use to make accounts correlate more with actual current year values now that the financial instruments are so much more prevelant.

Given the opposition, Symonds said there was now a question mark about whether the standard would be implemented in its current form. ‘It’s clearly the most difficult of all the international accounting standards,’ he said. ‘And frankly I’m not sure as of today which way it’s going to go.’

Symonds said that the IAS transition was proving more difficult than many companies had expected.

‘I think we worry, like many others do, that the IAS process is taking longer. It’s certainly looking more complex than it was and, whereas there was a possibility of a claimed convergence where the UK would adopt a significant number of international standards at the beginning, I think we’re probably going to see a piecemeal approach. And that’s unfortunate.’

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