IFRS professionals still in demand four years on
Despite requirements for International Financial Reporting Standards (IFRS) in place in the UK since 2005, very few companies have addressed the issue fully. Recent research highlighted nearly 60 percent of companies in the FTSE 350 say they’re not meeting the appropriate compliance standards. The problem appears to be a lack of intellectual knowhow when it comes to the standards. This has led to continued demand for interims to help companies adapt to the changes.
A fifth of the FTSE’s 350 companies couldn’t identify someone in their organisation with the relevant financial experience to explain IFRS.
The transition from GAAP to IFRS can be challenging. A fifth of the FTSE’s 350 companies couldn’t identify someone in their organisation with the relevant financial experience to explain IFRS. Companies who still have to adhere to the regulations are hiring interim consultants due either a lack of internal IFRS expertise or an incomplete conversion that requires “bolt on” processes to address reporting.
While the flexible ‘comply or explain approach’ is strongly endorsed within the industry, it is clear that it is not always applied as intended. The United Kingdom’s principles-based system of financial reporting doesn’t punish companies for their lack of compliance.
In a conversion, there are many areas to address both inside and outside the accounting and finance department. As well as other significant challenge areas like corporate governance, regulator scrutiny and interpretation of new standards, companies also need to consider how to transfer knowledge from consultants to employees.
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