FDs show little faith in IAS
Less than half of UK finance directors believe 2005's introduction of global accounting standards will be of any benefit to business in the UK.
Link: IAS special report
Link: Clikc here to view the full results
The findings of an exclusive Accountancy Age poll of 500 FDs will come as a massive blow to standard-setters preparing for one of the most significant and wholesale changes to financial reporting policy.
Some 43% of FDs polled said they could see no benefit in the switch to IAS. And, equally worrying, respondents said they did not expect investors to understand the impact of the rules. Less than 10% of FDs believe most investors appreciate the impact.
The frustration felt by FDs is clearly the result of fears that most UK companies are massively ill-prepared for the changeover, which has already been compared to the introduction of the euro and the millennium bug.
Although 49.6% of FDs said they believed preparation among FTSE100 companies is ‘good’, ‘very good’ or ‘excellent’, only 41% believe preparation among the rest of the FTSE350 is above average.
And just 23% believe there is a similar state of readiness among the UK’s other 1,650 listed companies.
The results will cause waves not just in the UK but in Europe too, as the UK accounts for the largest share of the EU’s 7,000 listed companies.
One FD who asked to remain anonymous said: ‘The accountancy profession should be doing more to inform and educate everyone, not just on a consultancy basis. Unless information is widely known it can only lead to confusion.’
Another said there was ‘not enough publicity outside the profession’. He added: ‘It seems to be for accountants whereas it should be to the benefit of all interested parties.’
A third warned: ‘Whatever standards are in place, it will not stop the accounting scandals that have gone on simply because I feel FDs are put under pressure to report improving results to maintain or improve the share price.’
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Another said: ‘The start date is looming closer and the standards are still evolving. We are promised 12 revisions/new standards in the next six months with more to follow. These are also increasing in complexity and I am concerned that some companies/auditors will not be ready.’
But other FDs urged business to do more. ‘It’s a good idea to harmonise accounting standards as much as possible,’ said one. ‘But it is vital that IASB gets broader support from business as a half-hearted adoption of IAS will add more confusion to comparing company performance for investors. For my industry (insurance) there is a great deal of uncertainty about the timetable for the eventual IAS for insurers, and a timetable must be agreed that is achievable and believable.’