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New York, February 12, 2003 - Research released today by the world's six largest accountancy firms shows that an overwhelming majority of countries - over 90 percent of a total 59 countries surveyed - intend to converge with International Financial Reporting Standards (IFRS). The findings, taken from GAAP Convergence 2002, found that 72 percent of countries intending to move towards IFRS have a formal policy in place to achieve this, in most cases aimed initially at listed companies. The results were drawn from research undertaken to gauge the extent and maturity of IFRS preparations around the globe.
"This year's survey reveals that great progress is being made towards achieving the vision of a single worldwide language of financial reporting, especially for listed companies," commented D. J. Gannon, leader of the IAS Centre of Excellence for the Americas, Deloitte & Touche. "Our findings indicate that the International Accounting Standards Board (IASB) is increasingly viewed as the appropriate body to develop a global accounting language that provides high quality financial information and enhances transparency."
"The fact that a vast majority of countries have an active agenda for IFRS convergence is very encouraging, but there is still much work to be done. Despite greater moves towards convergence, our survey indicates that obstacles still remain to achieving full and consistent adoption of the standards in the near future," D. J. Gannon continued.
More than half the countries (51 percent) indicated that the complex nature of some of the international standards - in particular, those relating to financial instruments, and others incorporating fair value accounting - is a barrier to convergence in their country. In addition, 47 percent of the countries surveyed also cited the tax-driven nature of their national accounting regime as a hurdle. Consequently, many countries are at present limiting implementation of IFRS to listed companies, rather than extending it to all companies.
Survey respondents also stressed the importance of getting better and more timely access to national language translations of the new standards and interpretations. While translations of international standards were available in 70 percent of the countries covered, in many cases the translations were not sanctioned by the IASB. In addition, in nearly one third of the countries where IFRS are available in the national language, the translations were not considered to be available quickly enough.
Another area of challenge identified was the availability of IFRS training, for which demand is expected to build up significantly as the world moves towards new standards. While, promisingly, the survey found that in 80 percent of the countries covered IFRS training now is part of the university curriculum, over one-third of those countries expressed the concern that coverage was still limited or offered by only a few universities within the country.
Based on the survey findings, GAAP Convergence 2002 recommends a number of principal action items for all parties involved in achieving further convergence.
"The accounting profession has actively promoted the development of global standards, but must increase its efforts to achieve the goal," D. J. Gannon said. "Greater commitment is now required to make IFRS available throughout the world, in the required national languages, through training, and by assisting those countries that have started the convergence process to complete it."
"We urge all capital markets participants - governments, regulators, national standards setters, as well as companies, their investors and the academic world - to continue to work together with the IASB and the accounting profession to eliminate differences between national and international standards and to each take actions in their field of responsibility to further convergence. Only with a joint effort will we achieve a common accounting framework that is interpreted and applied consistently."
The firms involved in the GAAP Convergence 2002 project are BDO, Deloitte Touche Tohmatsu, Ernst & Young, Grant Thornton, KPMG and PricewaterhouseCoopers.
A copy of the report can be obtained by contacting the firms involved in the research or from www.ifad.net.
Notes to Editors:
- GAAP Convergence 2002, which shows a marked leap forward in worldwide movement towards IFRS from previous years, highlighted that in the majority of countries with an intent to converge, (58 percent), national accounting standards will be replaced with IFRS for all listed companies, except where national issues remained not covered by the new standards. 22 percent said they were adopting on a standard by standard basis, and 20 percent said they were eliminating differences between national standards and IFRS as and when practical. 57 percent of those planning to adopt IFRS were driven by a government or regulatory requirement and 15 percent by standard setters.
- GAAP Convergence 2002 represents the third in a series of surveys conducted by the large accounting firms. The 2001 and 2000 surveys provided a status report of specific differences between national Generally Accepted Accounting Principles (GAAP) and IFRS. This year's report provides an indication of the convergence plans in the 59 countries surveyed. The focus is on consolidated financial statements for listed companies.
- The survey supports the work of the International Forum for Accountancy Development (IFAD), which was set up by the International Federation of Accountants (IFAC) and the World Bank in 1999, to raise standards of reporting and market regulation around the world.
GAAP Convergence 2002 and the 2001 and 2000 surveys are available at www.ifad.net.
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