Managers 'unaware of new accounting standards'

Just over half of Ireland's business managers are unaware of impending international accounting standards according to a survey by accounting and consulting firm, Deloitte & Touche.

The survey of 303 business managers, conducted in March, shows that only 51 per cent of finance directors and managers claim to be aware of the latest standards.

Among the new standards is a requirement that all EU listed companies will have to prepare consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) from January 1 2005.

The reason for this change is to assist in the development of an integrated financial market within the EU. The change will require Irish companies to put a significant conversion process in place and will change the way in which profits and Earnings Per Share (EPS) are reported. The new standards will also make significant changes to the balance sheets of many Irish companies.

"Following a number of high-profile accounting scandals in recent years there has been a renewed effort to adopt a series of new, international, accounting standards" said Ronan Nolan, National Assurance and Advisory Partner with Deloitte & Touche.

"Irish managers generally see the introduction of new financial reporting standards in a negative light: Our survey found that 68 per cent of Irish business managers believe new standards will bring additional reporting requirements and 50 per cent claim that they will bring additional costs.

"According to those surveyed, financial reporting and regulatory change will bring additional transparency (mentioned by 54% of managers), improved auditor independence (46 per cent) and improved risk management (44%)," he continued.

"The financial reporting and business implications of the new standards are diverse, difficult to estimate and differ significantly between companies," said Mary Fulton, Financial Services Partner in Deloitte & Touche. "For example, International Accounting Standard (IAS) 39 will require companies to examine current hedging strategies and accounting policies in order to anticipate and manage volatility in the profit and loss account.

"While finance directors and managers should have an in-depth knowledge of these issues, all managers need to increase their knowledge of the new reporting requirements" she continued.

"Conversion to IFRS is not just an accounting issue - a successful implementation requires a

multi-disciplinary effort which demands treasury, systems, risk management and accounting. Companies must scope the expected impact, develop an appropriate conversion process and implement the change".

69% of managers surveyed believe that new International Accounting Standards will only affect public companies in Ireland. It is anticipated that the Government may extend these reporting requirements to other large organisations and smaller companies in the future.