A few months ago, Economy and Finance Minister Nikos Christodoulakis announced that the implementation of International Accounting Standards (IAS) for all companies listed on the Athens Stock Exchange (ASE) would be brought forward to 2003 from 2005. The minister hopes that the speed with which this is done will help Greek companies adapt to new demands and principally modernize and restructure their operations. With this in mind, Law 2992/2002 mandating the use of IAS for annual financial statements in 2003 was passed by Parliament. There is general agreement that of all ASE-listed companies, banks have an advantage in adapting to the change, because they have a greater degree of flexibility. The new law provides for the possibility of new evaluation requirements for balance sheets drawn up in 2001, which some banks made use of. According to the Bank of Greece’s annual report, these banks assessed their share and bond portfolios as well as their positions in derivatives at their current value. In contrast, other banks applied the existing requirements and calculated their shares, bonds and holdings in other companies at values between their current values and the price paid for their acquisitions. Banks adopting the new evaluation requirements subsequently created a significant negative surplus value which was then added to their own capital and not shown in the balance sheet as a result of the special provisions in the legislation governing financial results of the previous years. This also applied to other companies doing the same. The method, of course, was one way for banks to salvage their profits from horrendous losses. Nevertheless, for some banks, even this procedure did not help to improve the picture. It is not clear if companies, with the exception of banks, realize the changes connected with the implementation of IAS. This is secondary. The real problem is that today, a number of banks are in no position to enforce IAS and be subjected to the consequences. Financial sources said that if certain problems are not resolved first, then it is pointless talking about adopting IAS, as its implementation will not be possible. One of these problems is the IAS requirement that banks record in their balance sheets their yearly contribution and actuarial obligations to social security funds. Calculated over a 35-year period, the latter is estimated to come to 1.76 trillion euros while yearly contributions are reckoned to range between 20-32 billion euros. National Bank of Greece, for example, is estimated to pay 32 billion euros in annual contributions. Under IAS rules, these payments would have to be recorded in the accounts, a procedure which would have a negative impact on the balance sheet. In addition, there is the question of how many domestic banks have taken steps to sort out their portfolios in accordance with IAS rules and how many have credible risk management systems. It is also not known how many banks have set aside actual provisions and how many actually record their stock market transactions. It is an open secret among banks that quarterly results are doctored, as they are not certified by accountants. As banks will have to publish results according to IAS rules next year, is it not advisable for them to adopt the requirements this year to enable comparisons next year? It is a favorite tactic of banks to adopt changes retrospectively, modifying previous years’ figures for the purpose of comparison. However, even this practice serves the purpose of minimizing the difference between the results of the two years. Nevertheless, this is an old-fashioned method, not appropriate for banks, which constitute the engine of growth and have a significant weight in the stock exchange. Time is running out and banks should resolve their major internal problems before the deadline, especially those concerning costs, risk management, quality control and social security contributions. It will come as no surprise if some banks are eventually forced to confess that they are not in a position to adopt IAS rules.