State relaxes its restrictions on implementation of IAS

Listed companies will be required to use International Accounting Standards (IAS) for their quarterly financial statements in 2004 instead of next year though full-year accounts will still need to be drawn up in IAS in 2003, the Finance Ministry said yesterday, underscoring the difficulties faced by local firms in implementing the new accounting practice by the original date. Earlier this year, the government passed legislation mandating the use of IAS by quoted companies with effect from 2003, two years ahead of a date set by the European Commission for EU-listed companies. The move was intended to improve market transparency and facilitate comparison of local companies with foreign firms. It was also meant as a booster for the stock market which has been in a slump since the bubble burst in 1999. The IAS requirement will apply to annual financial statements ending December 31, 2003, and to quarterly statements in the following year, the ministry said yesterday. Companies will need to keep two different sets of books next year, one under Greek accounting principles and the other in accordance with IAS. The government’s decision to provide some leeway to listed companies in implementing IAS underlines the problems faced by companies in adopting the new accounting standards and also suggests that the regulatory framework for the implementation is far from ready. Slightly more than half of the quoted companies on the Athens Stock Exchange currently prepare their financial statements under both Greek accounting principles and IAS, some for the benefit of international investors and others because of their overseas listings. Lack of expertise or resources means the majority of small-caps will find it difficult to make the transition. The Finance Ministry also unveiled draft legislation setting out the framework for corporate bonds and securitization operations backed by liabilities or real estate in a move designed to provide companies another source of funding. While the government has made extensive use of securitization operations in recent years, this complex financial transaction remains uncharted territory for Greek companies. Similarly, corporate bonds still constitute a novelty for the majority of firms, with only a handful of companies having launched issues, among them Attica Enterprises, Antenna TV station and Hellenic Railways. Another draft law up for discussion will see the Athens Stock Exchange handing over its regulatory and licensing powers to the Capital Market Commission, which will become the sole regulator for the market. The bourse, in which the State aims to float another tranche of shares by the end of the year, will be required to operate according to private sector financial specifications.

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