Listed companies unprepared for phased introduction of IFRS

Most Greek listed firms are still at the initial stage of planning toward the adoption of International Financial Reporting Standards (IFRS) in their bookkeeping and financial statements, and take a negative view of the timetable of transitional provisions for 2004, the final year of preparations, a research study presented yesterday shows. According to the study, conducted by business advisers Grant Thornton in collaboration with the Athens University of Economics, only 17 percent of listed firms have drawn up an action plan and begun their implementation while a further 44 percent is still at the stage of exploratory discussions on the transition from Greek generally accepted accounting principles (GAAP). The study was conducted between September 1 and October 24, 2003, via a questionnaire sent to the senior staff of all firms listed on the Athens Stock Exchange. Responses were received from 105 out of more than 370 listed firms. Faced with general reluctance, governments have had to push back the date for the compulsory application of IFRS, which are intended for universal application throughout the European Union beginning with listed firms. The initial timetable had envisaged their introduction from this year, but this was later extended to 2004. With Regulation 1606/2002 of July 2002, the European Commission established that European companies, securities of which are traded on regulated markets, have to use International Financial Reporting Standards (IAS/IFRS) in preparing their 2005 consolidated financial statements. The Committee of European Securities Regulators (CESR) in October unveiled a series of transitional provisions for 2004, advising a phased approach. Recent developments, however, indicate that this will be pushed further back, to 2007. Even powerhouses like France and Germany have reportedly asked the Commission to be exempted until 2007. According to the study, almost three out of four Greek firms (73 percent) expressed negative views about the prospect of transition to and implementation of IFRS as of 2004; 54 percent said the official timetable was «pressing,» while 17 percent considered it unfeasible. The remaining 27 viewed the prospect positively but only 10 percent described it as realistic. Forty-one percent of firms favor the simultaneous application of IFRS and Greek GAAP. As regards the framework of application, the majority of enterprises consider the endeavor a two-way process, also involving an adaptation of the tax and auditing authorities. An overwhelming majority take the view that IFRS application must be accompanied by changes in taxation, commercial law and the general accounting plan in force. The establishment of a central body is considered necessary to coordinate and monitor transition procedures; firms expressed willingness to participate in such a body, submitting specific proposals. Six in 10 enterprises prefer the new standards. Financial sector firms, in particular, consider that the new standards will provide more reliable data. All firms expect an improvement in the quality and adequacy of financial data, in their position in the market and in the results of efforts to attract foreign investors; all consider that adoption of IFRS will make financial statements more transparent and credible.