European Banks Urged to Share Expectations of IFRS
The impact of European Union regulation requiring all listed companies, including banks, to comply with International Financial Reporting Standards (IFRS) from 1 January 2005 will depend heavily on the differences between IFRS and current national standards, according to a report by Moody’s. As a result, EU banks should communicate their views on the implications of the changes as soon as they are in a position to do so, the rating agency added. The introduction of IFRS will, in Moody’s view, represent an important step in lowering further the barriers to cross-border trading in securities by ensuring that company accounts throughout the EU are transparent, reliable and comparable. ‘However, we also expect it to pose a major challenge to the entities in question – not only in the adoption of the new standards, but also in the task of explaining their impact to users of financial information,’ explained Yaroslav Sovgyra, Senior Accounting Specialist for European Banks. In order to help investors and analysts understand the impact of IFRS on their financial position and performance, EU banks should begin communicating their expectations of the implications throughout 2004, with the banks being in a position by 2005 to explain the numerical impact of IFRS on their financial statements.