More NewsMisinterpretation of IFRS Information a Risk to Capital Markets

Misinterpretation of IFRS Information a Risk to Capital Markets

Capital markets could be disrupted if European companies fail to explain clearly how their reported results have been affected by International Financial Reporting Standards (IFRS), according to a report published by Standard & Poor’s Ratings Services. The report -“Transition Without Tears: A Five-Point Plan for IFRS Disclosure” – notes that although a few European companies have held introductory sessions for investors highlighting various aspect of the changes, many are still undecided about how to communicate changes resulting from the transition to IFRS. For many companies, the transition takes effect for reporting years beginning on or after 1 January 2005. According to the report “A major concern is that the changeover to IFRS could disrupt capital markets in the short term because investors and other users of accounts misinterpret the different information being provided. Until now there has been precious little guidance for companies on the level of disclosure that market participants will expect, so there are real risks of information being misunderstood.”

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