Companies 'disturbingly unaware' of IFRS

Eric Anstee, chief executive of the ICAEW, has warned that UK listed
companies are still ‘disturbingly unaware’ of the impact of international
accounting standards on their key performance indicators (KPIs).

Revealing the results of ICAEW research at the Institute’s annual conference,
Anstee said that 58% of the companies surveyed were unsure of the impact of IFRS
on their KPIs and only 36% had announced the impact of the new standards on
their 2003 or 2004 accounts.

Anstee said that 68% of the companies believed that IFRS would have no effect
on the share. He said this was not due to neutral feedback from journalists and
analysts, but was most likely because ‘analysts are ignoring IFRS and adjusting
back to UK GAAP’.

‘I think we’ve got to ask the question – are companies being complacent given
the uncertainty about KPIs? How can they be sure that the unknowns will not
create price sensitivity,’ said Anstee.

The ICAEW head also warned that private companies seemed unaware of the need
to comply with IFRS. He said that 48% of the unlisted companies surveyed were
unaware of the Accounting Standards Board’s (ASB) proposed convergence programme
between IFRS and UK GAAP, and were underdone in their preparations for the
switch.

‘Many unlisted companies don’t see the need to put in place the
implementation and communications plans and staffing resources which listed
companies have found to be so necessary,’ said Anstee.

‘I’ve been told by FTSE finance directors that some 40% of finance staff time
is being spent on IFRS compliance. So this is really something that unlisted
companies need to give some serious thought to.’