International Accounting Standards facing more delays

Faced with a general reluctance by firms, the government is continuously having to push backward the date for the compulsory application of International Accounting Standards (IAS) in listed firms’ financial statements; 2003 had been initially set as the year of introduction. As everyone is awaiting the final proposals of the European Commission, all indications are that IAS will not be applied in firms’ books even next year. Economy and Finance Ministry officials were recently referring to the Commission’s deadline of 2005 as the new time limit, but recent developments seem to be pushing this further back, to 2007. Even powerhouses like France and Germany have asked the Commission to be exempted until 2007. The chairman of the Chartered Auditors and Accountants Board (SOEL), Christos Alamanos, says: «The application of IAS is expected to have beneficial effects throughout the economy. «Certainly, IAS will not provide a cure-all for ‘cleansing’ the Greek stock market and dealing with the problems of listed firms, but their application will contribute to upgrading the rules of accounting transparency among Greek enterprises. «These rules and principles will provide a strong ‘tonic’ measure for improving the image of the stock exchange. This will strengthen the credibility of financial statements, boost liquidity and attract more funds from foreign capital markets.» Others are more cautious, arguing that IAS cannot single-handedly bring back the lost confidence of small investors in the credibility of balance sheets as a result of accounting irregularities. The work of chartered accountants and auditors, better management and the effective role of oversight authorities are seen as the most potent factors in restoring the credibility of balance sheets and protecting the investing public. The recently enacted incompatibility between the tasks of auditing firms and business consultants, and the strong fines for rule-breakers, are expected to help in battling the climate of general suspicion that emerged after the financial scandals in the US, and grew in Greece as a result of the serious omissions of auditors in the case of the huge embezzlement in ETBA Finance. The prevalent impression is that the observations and notes of chartered auditors do not always shed light on significant parameters of firms’ activities. There is widespread doubt that Greek firms will be ready to apply IAS any time soon. «It is a difficult endeavor, requiring a lot of work and considerable time, and implying a certain cost for Greek enterprises. This is also evident in other countries, which have asked the Commission to put off the issue beyond 2005,» says Alamanos. «The government must take such concerns seriously into account, in order to help Greek enterprises solve the problems presented by the adjustment of the legal framework and the initial application of IAS that may well create ‘accounting’ profits (or losses); this may necessitate additional measures concerning the distribution of such profits,» he adds.

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