Byline: William Wright
The Committee of European Securities Regulators (CESR) has published a recommended timetable for listed companies in Europe to manage the transition to international accounting standards by 2005.The implementation of International Financial Reporting Standards (IFRS) is one of the central parts of the European Union's attempts to create a single financial market by 2005, and has also been one of the most controversial. Under the terms of an agreement struck in July 2002, all listed companies in Europe will have to use international accounting standards for their 2005 consolidated accounts.
Given the diversity of national accounting standards in Europe, the adjustment to international standards is expected to cost large listed companies tens of millions of euros each in restructuring and software costs. Banks and insurance companies, which will be particularly hit by new rules on valuing financial instruments, could face bills of as much as [euro]150m ($188m) each, according to analysts. In addition, the new standards will have a significant impact on the way in which companies report their profits.
To avoid unnecessary earnings surprises and exceptional items for restructuring when the new rules come in, CESR has recommended that all listed companies take a four step approach. …