Link: IAS special report
Many of the companies in former Soviet-block countries, such as the Czech Republic, Estonia and Poland, are ahead of their counterparts in more established EU nations in their conversion to international financial reporting standards, due to the poor accounting systems with which they were previously forced to work.
‘In many of the accession states there was not a developed accounting framework. In the absence of this, companies in these countries have been adopting IFRS. It has made it much easier to shift towards IFRS in totality,’ said Ian Wright, senior partner at PricewaterhouseCoopers’ global corporate reporting group.
‘A lot of people in more established European countries have shut their eyes to the issue of IFRS and are now starting to panic,’ said Simon Thompson, head of corporate development for ACCA’s Central and Eastern Europe office.
‘In the accession states, everybody has had to change their mindset and IFRS has just been part of that.’
But while listed companies in such nations should at least enjoy a state of competitiveness with companies in other EU countries, the same cannot be said for private companies.
‘Those who haven’t moved may find significant barriers to cross-border trade. Their accounts will be difficult for others to understand, which will lead to credit risk and insurance issues,’ said Wright.
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