Accounting Concerns Depend on Sector Needs

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Byline: Kit Bingham

Companies need to take sector-specific accounting concerns into consideration as they prepare for the introduction of International Financial Reporting Standards (IFRS) in 2005.Manfred Wiegand, global utilities leader for PricewaterhouseCoopers (PwC), says: "As companies come closer to 2005, they need to focus on understanding the impact of IFRS on their main business operations."

These effects will be general and industry-specific.

Wiegand is the lead author of a newly published PwC paper, Crunch Time, which sets out the particular accounting challenges that energy and utility companies face in complying with IFRS.

There is little guidance at present from the standards setter, the International Accounting Standards Board (IASB), for oil and gas companies on exploration accounting.

The IASB has issued an extractive industries paper but Wiegand says: "It's not a high priority. They are not able to address the industry issues."

Companies cannot expect detailed, sector-specific guidance until after the 2005 deadline has passed, he says.

In the utility sector there is no detailed accounting treatment for long-term contract costs and decommissioning costs. "Companies will have to look at these costs and see how they apply in IFRS," says Wiegand.

Large companies should be well down the road of preparing for the deadline but Wiegand fears that groups have not fully grasped the extent of the changes required. …