Euro Audits - Unready face qualification
Fee vice-president Goran Tidstrom warned managers and auditors that, like the year 2000, preparedness for EMU should be considered a criterion for qualifying accounts.
‘Because of the impact of the euro on the going-concern assumption and the long lead times for company preparations, the auditor must assess whether the impact is properly reflected in the financial statement,’ Tidstrom told the FEE conference.
From FEE’s research work with companies converting to the euro, Tidstrom said the closer they got to the change-over, the more they realised they had to do.
‘Large pan-European groups as well as large companies generally are likely to need the full three-year change-over period before they manage to change their systems to the new situation,’ said Tidstrom.
His warning was echoed by Dennis Keeling, chief executive of UK software trade body BASDA. Because of the euro and the year 2000, the next 14 months will be the ‘most demanding the IT world has known,’ said Keeling.
Tidstrom aimed his advice in particular at people in countries such as the UK and his native Sweden which have opted out of the first wave of EMU.
‘In the euro zone you at least know where you are from a legal point of view. Outside, you are very uncertain,’ he said.
‘The issue is further complicated for these companies because, should their government decide to join the euro zone, the likely timetable for preparation will almost certainly be shorter than that available for current euro-zone companies,’ he added.