Email a collegue.| Headline: | FDs turn on IFRS |
| Description: | Senior finance directors have turned on new international financial reporting standards, accusing them of rendering accounts less relevant and comprehensible.
Jon Symonds, chairman of the Hundred Group of finance directors and CFO of AstraZeneca, said yesterday that, although he agreed with the goal of a uniform set of global reporting standards, IFRS as they were currently conceived "undermined communications between business and owners". In particular, there were reservations about the use of fair value accounting and the influence of the US on the shape of the new standards, He told the FT. His comments follow an appeal by the Institute of Chartered Accountants in England and Wales (ICAEW) for a significant pause in the Accounting Standards Board’s (ASB) IFRS convergence programme, in order to avoid burdensome costs and significant uncertainties for unlisted companies. The ICAEW’s chief executive, Eric Anstee, said that further changes in the near term to UK standards designed to bring into effect IFRS requirements could backfire. He suggested that the ASB should instead wait until a clear picture has emerged of the outcome of the international project on accounting by SMEs and other entities without public accountability. The ICAEW has called upon the IASB to produce a significantly less complex set of standards for companies without external investors, using historical cost rather than fair value as the primary basis of measurement. Said Anstee: “If the ASB was to proceed with the current IFRS convergence programme, private companies could face the grim prospect of switching from UK GAAP to full IFRS to simplified IFRS in short succession. This would be an unacceptable outcome, involving substantial costs and uncertainties, without delivering any corresponding benefit to the users of the accounts.� We are asking for the Accounting Standards Board to slow down application of IFRS to smaller companies. That is largely driven by the experience we are seeing in larger companies," he told AccountingWEB. "If the big companies are finding it difficult, the smaller companies are going to find it near impossible." "We are still very positive about the concept, we just think there needs to be more time to implement the standards." Stephen Butt, a partner with Solomon Hare says the volume of data required under IFRS is going to make reports more opaque. The new format will also be a barrier. "WE are going down the route of having various items put through income statements that would not have gone through a traditional UK profit and loss account, so statements are going to be less clear about the underlying financial position." He said that the US would undoubtably have an influence on the development of IFRS. "Whether that going to be good, bad or indifferent, one has to see," he said. "What is important is that we go down a principle-based approach rather than a rules-based one." However, continual changes were unlikely to endear the process to large companies. "They will have spend time getting ready for these standards and expect them to be stable for a number of years, whereas there are already changed being proposed," he said. |
| Date: | 28.08.2005 |
| Email a colleague | |
| back | |
|
|
|
Adapt, sruvive, thrive
