While global convergence in accounting standards is still a long way off, and many countries continue to show major differences between domestic and international standards, Ireland is responding to the challenge. An international accounting survey of national accounting standards benchmarked against IAS showed that while there are inconsistencies between Irish rules and IAS, overall, Ireland performed better than a lot of other countries.
Entitled GAAP 2001, the survey showed that approximately one-third of the 62 countries surveyed have an active agenda on the proposed changes to national requirements. According to Brendan Jennings, partner at Deloitte & Touche, Irish accounting standards are probably closer to IAS than many European countries‚ GAAP. Therefore the transition should be a lot easier. The transition to IAS will affect some 7000 public companies in Europe, and must be implemented by 2005.
Jennings does point to one area where Ireland is behind its European counterparts. While a number of European companies located in Germany, Switzerland and France, are preparing their accounts using IAS, to his knowledge no Irish company is as of yet doing so.
Other areas where there are inconsistencies between Irish rules and IAS that could lead to differences for many enterprises in certain areas are that under Irish rules goodwill can be treated as having an indefinite life and therefore not be amortized (IAS 22.44/51), and deferred tax assets and liabilities can be discounted (IAS 12.53).
The aim of the transition to IAS is to achieve a framework which would improve investor confidence by providing greater transparency and comparability of the financial information used in investment decisions, and thereby would contribute to financial market stability and economic growth around the globe.
The potential for IAS to provide the basis for comparable national and cross-border financial reporting is increasingly clear. Across the world from Asia to Latin America, national governments, regulators and accountancy professionals are actively considering how their national accounting rules differ from IAS and how to reduce those differences. This process will, in many countries, lead to a significant improvement in financial reporting transparency and comparability. |
