PracticeAuditSilent majority unprepared for IFRS

Silent majority unprepared for IFRS

Only a small minority of the 7,000 companies in Europe affected by IFRS have held specific events for analysts, while the quality of those reporting is varied and imprecise, according to analysts Morgan Stanley.

Link: Help for directors struggling with IFRS

In its global valuation and accounting report entitled ‘IFRS 2005: And they’re off (well some of them)’, the ‘best in class’ have already met analysts in the run up to the compliance changeover, however, these only number ‘several dozen’ with a ‘large silent majority’ still trailing behind.

Jeannott Blanchet, managing director of equity research at Morgan Stanley, said: ‘The best in class are coming out. We think it’s none too soon, but investors should take comfort that these first disclosers are on top of their game, and should continue to manage the transition smoothly.

‘But there is still a large silent majority for which we are left wondering about their level of preparedness and the potential effect of IFRS on their reported numbers.

‘Those that have communicated have done it in different ways, as would be expected, and with different levels of precision and clarity. Many are providing purely qualitative information at this stage, some with partial quantification. Others are providing only a generic explanation of potential effects, without specifying which of the available options they will select in first applying the rules.’

The report added that it expected ‘many more’ companies to come out with ‘substantive communications’ in the first three months of 2005 and that the larger cap first disclosers will be able to absorb IFRS adjustments to earnings and profits due to their ‘massive balance sheets and results’.

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