Grant Thornton has spoken out against a call
by the Institute of Chartered Accountants England and Wales (ICAEW)
for a single date approach to implementing new IFRSs.
Grant Thornton International executive
director of international financial reporting Andrew Watchman said
while the network acknowledges the argument for a single date
approach – such as less disruption in accounting policies and a
reduction in costs – it prefers a phased approach.
“They are important arguments but we think
those effects can be mitigated through good disclosure, as
companies are leading up to making the changes and once they have
made the changes mitigating the comparability effect,” Watchman
told the International Accounting Bulletin.
The ICAEW says making all the new IFRSs
scheduled for completion this year effective in one go is the most
efficient option for both users and preparers of financial
“There is an avalanche of changes to IFRSs
heading our way. There will be a steep learning curve for both
businesses preparing financial reports and the users of these
reports, and inevitably there will be demands on the resources of
the hard-pressed finance function,” ICAEW financial reporting
faculty head Nigel Sleigh-Johnson said.
Sleigh-Johnson thinks the transition to the
new and revised requirements will be smoother if the International
Accounting Standards Board (IASB) made them all effective from a
single date, rather than through a phased approach.
Watchman does however warn that a single date
approach comes at a price.
“Firstly to achieve those benefits of
minimising the period of discontinuity you really need to prohibit
early adoption and if you do that companies won’t have flexibility
any longer to actually develop there own implementation plan,”
“Because everything has to happen on one date,
that date has to be some way off into the future which means
changes and improvements that could be made more quickly actually
get pushed out because there packaged up with other more complex
IFRSs that take more time to implement.”
An example is the new standard on
consolidation expected from the IASB by March. According to
Watchman the standard is partly in response to the financial crisis
and he believes there should not be a delay for those improvements
to make it to market.
Improvements have been made to IFRSs and after
enough time has lapsed for companies to have made an orderly and
efficient preparation for the change, including communicating with
their investor community and other users, they are put out in the
market place, Watchman said.
“If these standards are not improvements they
shouldn’t be happening at all. If they are improvements they should
be happening, implemented as soon as is practicable taking into
account different levels of complexity and giving companies enough
time to make an orderly and efficient transition,” Watchman
The ICAEW said the new standards due for
completion in 2011 – including financial instruments, insurance and
leasing – should be made mandatory no earlier than in 2015 to allow
for a minimum three-year transition period.