A MAJORITY of chief financial officers is yet to identify the impact of the planned introduction of International Financial Reporting Standards (IFRS) in Australia, according to a new survey.
A MAJORITY of chief financial officers is yet to identify the impact of the planned introduction of International Financial Reporting Standards (IFRS) in Australia, according to a new survey.
The survey also found that 68 per cent of companies have not quantified the impact of IFRS on their financial accounts.
In addition, it found that 73 per cent of companies have not established a timetable for the transition process.
The survey by the Association of Chartered Certified Accountants (ACCA) was officially launched in Perth early this week.
“These results are particularly concerning given that many organisations will not only have to produce accounts to existing Australian standards next year, but will also have to provide comparative data in accordance with the new (international) standards,” ACCA executive director Asia Pacific Allen Blewitt said.
“This means that organisations really have to be ready for the change by this time next year.”
The survey follows last week’s joint call by the Australian Securities and Investments Commission and the Financial Reporting Council for directors and management to get more actively involved in preparing for the adoption of international accounting standards.
ASIC deputy chairman Jeffrey Lucey and FRC chairman Charles Macek issued a joint letter to the chair of the boards of all publicly listed companies and 200 of the larger private companies regarding their preparations.
“For many companies the adoption of international standards will result in significant changes in financial reporting and, therefore, should be regarded as a strategic management issue, not simply a technical accounting issue,” Mr Lucey said.
He added that many companies would need to embed changeover strategies that aligned internal reporting systems with the new external reporting environment.
Mr Lucey said companies also should develop strategies aimed at preparing analysts and other significant stakeholders for the changes.
In this regard, Mr Blewitt said many companies may appear to be less profitable under IFRS due to the way they would have to account for staff superannuation benefits.
The ACCA said that of the 42 current Australian accounting standards, 29 would change under IFRS.
In addition, three entirely new standards are to be introduced.
The survey, which attracted responses from 100 CFOs, indicated that larger organisations were better prepared.
The 30 per cent of respondents who indicated that they ‘little understood’ the new standards were generally in smaller organisations, not-for-profit and public sector entities.
However, among all respondents, only 3 per cent said they ‘well understood’ the move to IFRS.
And 54 per cent of respondents said they had not identified the main differences between Australian standards and IFRS.
This may partly reflect the fact that some of the new international standards have not yet been finalised.
The survey found that 60 per cent of organisations have not yet decided whether to run Australian and international standards in parallel in 2004.
However, of those that have decided, a majority will not run parallel accounts.
The main perceived benefit of adopting IFRS was having a common set of global accounting standards.
Other benefits nominated by the survey respondents included the ability to compare peer organisations globally, the ability to make international investment decisions more easily and improved international capital flows.
