Magazine article Financial Management (UK)

Cartesis[R]: You May Be Aware of the Imminent Transition to International Accounting Standards (IAS), but Do You Understand Its Implications for Your Systems? Nick Forman Answers Your Queries. (Questions & Answers)

Magazine article Financial Management (UK)

Cartesis[R]: You May Be Aware of the Imminent Transition to International Accounting Standards (IAS), but Do You Understand Its Implications for Your Systems? Nick Forman Answers Your Queries. (Questions & Answers)

Article excerpt

Why should adopting IAS make me think about my firm's financial systems?

On 7 June the EU adopted a regulation that requires all listed European companies to prepare their consolidated accounts for financial years commencing on or after 1 January 2005 under IAS. Subsidiaries of listed companies will therefore also need to prepare IAS accounts for consolidation purposes.

Those companies affected will have to comply with the accounting standards issued by the International Accounting Standards Board (IASB) in place of domestic accounting standards when preparing their consolidated accounts. Listed companies, which will need to provide consolidated accounts under IAS, should not only be thinking about the change to IAS, but also be asking themselves whether their financial systems are able to facilitate that process. Organisations had to think long and hard about the systems implications of the millennium date change and the introduction of the euro; the same is true for IAS.

For example, companies will need to provide IAS-based 2004 figures (and in some cases 2003 figures) for comparative purposes. Because of this, companies should be analysing the impact that the change to IAS will have on their reported results in order to educate shareholders, banks and analysts before the changeover. Indeed, there are current proposals to introduce a requirement to disclose the effect of adopting IAS on the reported financial position, financial performance and cash flows.

Firms should be asking themselves how easy it is to do this using their current systems. As more and more organisations look for one central system to handle all their reporting needs, the last thing you want to do is set up a separate system for IAS while you go through the changeover period. This will only undermine the benefits gained by integration. It is also worth considering how, in areas where systems and staff are already struggling to cope with tight reporting deadlines, they will cope with the extra reporting requirements under IAS during the changeover period.

But I only have to worry about dual Gaap reporting for consolidated accounts during the changeover period, don't I?

It's true that for consolidated accounts the local Gaap reporting requirements will cease after the transition period, but the financial accounts of all of the reporting units in the group will still have to be published in local Gaap in addition to the IAS format reporting for consolidation purposes. To reduce workload and maintain consistency, your system should ideally be able to produce both formats from a single integrated database. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.