PracticeAuditCalm before the storm

Calm before the storm

The more observant among you will have noticed some changes to the International Accounting Standards Board's website in the last week or so. New standards have started cropping up. In themselves, they don't sound earth shattering.

The provisional final versions of IAS16 Property, Plant and Equipment and IAS24 Related Party Disclosures anyone?

But don’t underestimate their importance. The IASB had always aimed for this autumn to launch 12 updated standards, due to bite in 2005. And its approach is to drip feed them – a couple one week, a couple another.

It may not be the big-bang launch many of us were expecting, but it does give companies something to aim for as they create shadow accounts in 2004. It does also lay to rest the excuse that, without draft standards, listed companies can do little to prepare for the biggest accounting revolution in decades.

This is the calm before the storm. And next year, it will all be different.

This crop of 12 standards are not hugely controversial, though very little in the world of accounting rules is wholly without controversy these days.

These standards were inherited from the IASB’s forerunner, the International Accounting Standards Committee, and are ‘merely’ updates.

But between January and March next year, all that will change. That is when the IASB gets its teeth into the meatier issues, issues like macro-hedging and insurance contracts. These are already headline grabbers.

And they will continue to hog column inches once they appear, as their critics line up to take shots at the IASB. A cynic might suggest that publication of these rules was held back to maximise their impact. The truth is more prosaic – they required the most work.

Of course, the end game is not about the hedging and insurance standards, which will, confusingly, appear as international financial reporting standards, incorporating international accounting standards. (Do keep up at the back).

The end game is about convergence. Quietly, teams from the IASB and FASB (the US standard-setter) are working on a convergence project they hope will bear fruit by 2007. And don’t kid yourself that this only affects larger companies – work will soon begin on accounting standards for small and medium-sized entities.

So read and digest these 12 standards. Prepare to apply them in the New Year. But don’t pretend the hard work is done. That’s still to come.

Email comment@accountancyage.com.

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