International Standards Special - Target 2005.
Around 7,000 European-listed companies have until 2005 to adopt
Concerns have been raised over the ability of analysts to understand changes to financial reporting as a result of the adoption of global accounting standards.
Around 7,000 European listed companies must apply IASs by 2005 at the latest as demanded by the European Commission earlier this year.
‘There is an enormous task of training and education. Only a small section of Europe has any knowledge of IASs,’ warned Goran Tidtrom, deputy president of the European Federation of Accountants.
Andrew Simmons, speaker at last week’s IASC conference in Brussels, said: ‘One of the problems is adjusting analysts’ understanding.’
There are certain IASs that continue to cause consternation in UK accounting circles due to their development using the US rule-based approach. The UK applies a principle-based approach.
And there are still concerns that US GAAP will be chosen as the alternative to IASs in certain cases.
The US, Canada and Japan are the only countries not to recognise IASs without additional disclosure.
Ken Wild, technical partner at Deloitte & Touche, said: ‘There is a bigger than normal learning curve and things are that much more uncertain. Analysts ought to be able to understand it, but if they don’t we have to ask ourselves if they are good accounting standards.’
