UK businesses should delay switching to the euro for as long asor preparation. possible after 1999, because the accounting software industry will not be ready and able to cope with it.
The warning came from the industry’s own trade association, BASDA, which announced a new euro accreditation scheme last week.
BASDA chief executive Dennis Keeling said: ‘This is practical advice, based on the readiness of the business and accounting software developers to supply fully tested EMU-compliant products.’
BASDA approached three Big Six firms, including KPMG, about their willingness to run the European-wide testing system which will be put out for tender this month.
Malcolm Stirling, director of EMU IT for KPMG, divided the suppliers into two camps. ‘A handful are reasonably ready to meet the euro deadline, although they don’t have all the IT and accountancy specifications,’ he said. ‘But most have sat on their hands.’
The BASDA accreditation scheme will have two levels. Applications meeting the minimum legal requirements would be accredited as ‘compliant’.
Companies that conform to BASDA’s definition of usability would be classed as ‘advanced’. Under European law, companies will need to show they can convert payments and invoices to the euro. During the transitional period, when national currencies run in parallel with the euro, conversions will have to be made using the euro in a two-step process, known as ‘triangulation’.
Guy Letts, R&D director for Sagesoft, said that only a small proportion of UK companies will need to transact in euros from 1 January, but other companies will need to check with suppliers whether they will have to deal with euro invoices and payments. They will also need to comply with EMU legislation from day one, whether or not the UK joins.
‘If a company deals with French, German or Irish currencies, you must do triangulation after 1 January. You can do it manually with a calculator, but if you do a great deal of foreign currency work, your system will need to be prepared.’
Sage supported the BASDA accreditation scheme, said Letts, but he added: ‘We think accreditation should be a simple, low-cost issue. I don’t think the task requires the expertise of the Big Six. It’s a straightforward testing issue.’
BASDA did not fix the costs of accreditation but Keeling compared the euro scheme to its VAT accreditation system, which costs between #1,000-#2,000 per company.
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