CESR published proposals for consultation which set out how companies can effectively manage the communication of the impact of the transition to international accounting standards in 2005. This transition poses a significant challenge for approximately 7000 EU listed companies and will significantly change the presentation of their financial position.
The transition must be carefully monitored to ensure that every company will continue to meet its reporting requirements. Equally, investors must be able to understand the effect of the new reporting standards and to assess the financial position of listed companies reporting on this new basis.
CESR stresses the need for listed companies to consider:
what type of information companies can publish before 1st January 2005 in order to explain to investors the potential impact of the new IFRS standards. CESR proposes that:
a) Issuers communicate with their financial statements for the year 2003, how they intend to carry out the transition to IFRS and explain in a narrative form the key differences in accounting methods that have been identified;
b) at 2004 year end, issuers be encouraged to give quantified information on the impact of these new standards on their 2004 financial statements.
Which accounting rules should be adopted by issuers for the preparation of quarterly (where applicable) and half year interim financial data that will be released in 2005.
a) In this regard CESR proposes that issuers start applying as from 1st January 2005 IAS 34 “Interim Financial Reporting”. Where this is not possible issuers should be encouraged to use IFRS recognition and measurement principles for the preparation of quarterly and half yearly reports to be published in 2005, consistent with the accounting methods that are to be applied in preparing the consolidated financial statements for the year 2005.
How to achieve comparability between interim or annual financial information for 2005 and earlier equivalent periods, to ensure investors can effectively interpret the development of the companies financial position CESR proposes:
a) that comparative information for previous interim reporting periods be provided and restated according to IFRS, using the same accounting rules as those used for the current similar period in 2005.
b) a format that facilitates the understanding of the differences between accounts drawn up according to previous accounting standards and accounts prepared under IFRS.
CESR welcomes comments and contributions from all interested parties on this Draft Recommendation. The deadline for submitting responses to the consultation paper is 20 November 2003. Responses should be addressed to Mr Fabrice Demarigny, Secretary General, CESR, by email at secretariat@europefesco.org. CESR will hold an open hearing on 12 November 2003 at the CESR premises in Paris.
Press release
Consultative Document
© CESR - Committee of European Securities Regulators
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