Newspaper article The Journal (Newcastle, England)

Business Insight; PRICE WATER HOUSE COOPERS

Newspaper article The Journal (Newcastle, England)

Business Insight; PRICE WATER HOUSE COOPERS

Article excerpt

WITH the majority of AIM companies set to report under International Financial Reporting Standards (IFRS) from January next year, they must ensure they don't just look at the conversion as an accounting hoop to jump through, but also as a change that potentially impacts commercial activities, according to the latest PricewaterhouseCoopers LLP report.

The report, IFRS and AIM - How ready are you?, analysed the impact of IFRS on UK AIM companies and compared key areas of their planned IFRS conversion with findings from previous research into FTSE-350 finance executives' experience of the process.

The research showed that there was a degree of variation between AIM companies' readiness for IFRS. Encouragingly, almost a fifth (18%) have chosen to adopt IFRS early. Not surprisingly, the majority of these had a larger market capitalisation, where there is a greater need for comparability of performance and results with UK main market companies and internationally. Of the remaining respondents, 46% say they plan to adopt in 2007 and 36% in 2008.

While AIM companies appear on track to hit their required adoption deadline, there are some areas of concern, particularly in terms of assessing the commercial impact of the new standards, with only one in 10 having fully completed their analysis of the impact of IFRS on their company's business.

PricewaterhouseCoopers' earlier survey on the FTSE 350 showed one in four respondents had seen business decisions impacted by IFRS, particularly potential mergers & acquisitions. The PricewaterhouseCoopers AIM company survey shows 70% of AIM companies have either not begun a general impact assessment or have only carried out a preliminary assessment. And over 41% of AIM companies have yet to assess the impact of IFRS on mergers & acquisitions.

In view of the limited commercial assessment carried out to date, not surprisingly, some 59% of respondents had yet to have any communication at all with investors or analysts with regard to the impact of IFRS conversion. …

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