| 62 per cent of Irish cfos back international accounting standards |
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Over 62 per cent of Irish chief financial officers support the introduction of International Accounting Standards for listed companies according to a recent report issued by PricewaterhouseCoopers. This compares with 79 per cent of European cfos.
And a further 76 per cent of Irish cfos want the option to publish IAS data before 2005.
The reasons behind the positive attitude towards the switch over are mainly for international comparability.
Research commissioned by PWC shows that the important majority of European business supports the introduction of the International Accounting Standards (IAS) for group financial reporting for listed companies.
The survey asked 21 cfos in Ireland for their view son IAS and on the European Commission’s proposals to require all listed companies in the European Union to submit consolidated accounts under IAS by 2005. If this proposal becomes EU law, it will be introduce the biggest changes to financial reporting in Europe in the past 30 years.
‘International accounting harmonisation will be good for Irish business’ according to David Devlin of PWC. He added ‘It will increase the likelihood of Irish companies featuring on the radar screens of an increasingly global investment management world.’
The survey shows that while Irish cfos are comfortable with the existing accounting regime which is tied to the UK, they want the freedom to report their results in an accounting language which is more widely understood around Europe and globally. Consequently Irish business welcomes the recent European Commission proposal to require all listed companies in Europe to use IAS by 2005.
If offered a choice of standards in Europe 62 per cent of Irish cfos surveyed would make IAS the sole standard or an alternative to national generally accepted accounting principles (national GAAP). 62 per cent were in favour of the European Commission’s proposal to make IAS mandatory for listed companies by 2005.
According to Devlin ‘90 per cent of Irish listed companies surveyed already report their results on the internet, and this figure will continue to rise. The use of the internet is probably the key driver for change. Cfos know that international investors access and analyse internet information for investment decisions - but that data is not valid for cross-border comparisons because almost all the world’s governments currently require companies to follow unique national rules. Companies, just like investors, a single global set of rules so that comparisons can be made.’
The survey also revealed the positive attitudes towards changing to IAS. 80 per cent of the companies that had been through the process of converting to IAS state that there are more benefits that drawbacks.
Cfos report that strategic business considerations, such as international comparability and raising finance, were the main reasons for considering change to IAS. They are most likely to be concerned about analyst’s views of the apparent change in performance trends that might result. For this reason they favour careful planning, and 76 per cent of the Irish repondees saw merit in starting to publish IAS data before 2005.
But the survey also highlighted the most companies do not yet have converting to IAS on their board’s agenda which many adopting a wait and see approach. Devlin summed up by saying ‘Cfos should take the IAS debate into the boardroom now. We believe that the EC’s recommendations should stimulate companies that have not already started to think seriously about IAS to consider the change in the very near future.’ |
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| Article appeared in the January 2001 issue.
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