UK finance executives are unprepared for major changes to international financial reporting standards, according to a survey from Ernst & Young (E&Y).
UK finance staff will this year have to introduce new financial reporting standards that will affect aspects of business ranging from procurement and corporate transactions, to covenants and employee bonus schemes.
The survey of finance executives at 600 UK companies found a lack of readiness for new accounting rules such as lease reporting (which will put leased assets on corporate balance sheets) and revenue recognition rules for when companies should recognise revenues from customer contracts.
More than two thirds (69%) of respondents supported the move away from UK UK generally accepted accounting principles (GAAP) in subsidiary accounts because of the benefits of common rules for reporting globally.
However, more than half (54%) said they had not begun to assess the impact of the move to new accounting rules and 61% had not begun to think about the tax implications of changes to financial reporting.
The survey also highlighted challenges in complying with new reporting requirements.
Forty five per cent of finance executives said that the International Accounting Standards Board should reassess the usefulness of current standards, before embarking on any more projects.
Andrew Davies, partner and leader of financial accounting advisory services at E&Y, said: “We are experiencing a big bang of regulation that will transform how companies analyse and report their financial information and make decisions. Taken together, these will have a fundamental impact both on the measurement of company performance and how practical decisions are made.”
“The large number of companies yet to embark on any assessment of their future accounting is a concern. Early planning can ensure optimal decisions are made which are essential in order to future proof the business.”
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