A survey by PwC, the accountancy firm has found that less than 11% of major companies are fully ready to implement major changes in which they prepare accounts. From 2005 all companies publicly listed in the European Union will have to comply with the International Financial Reporting Standards. (IFRS). The organisation who laid down the IFRS is the International Accounting Standards Board.

The change to accounting rules, will collide with other major changes, notably from the Sarbanes-Oxley Act 2002. Whilst Sarbanes-Oxley only applies to American companies, any foreign companies with a listing in the US will need to comply. Financial institutions will also be gearing up for the Basel II accord on regulatory capital.

UK companies face the prospect of additional auditing demands. Internal Controls for risk management may be introduced by the UK Financial Standards Authority (FSA).

The biggest unknown for companies, especially those with weak implementation programmes is the effect it will have on their financial statements. The fear is that in 2005 an awful lot of companies will be making restatements of their accounts. Although PwC suggest that widespread systemic failures are unlikely.

PwC identified seven steps that companies will need to take for full IASB compliance. They are

*   Business impact assessment completed (even if preliminary)
*   Accounting policies decided
*  Missing data identified
*  Computer systems adapted
*  Processes in place
*  Internal controls enhanced
*  IFRS embedded across business units

Only 11% of companies had implemented IFRS across their business. Of more concern was the 25% of businesses that had not even completed the initial business impact assessment.

Larger companies were more advanced in adoption of the rules. Possibly because they have exposure to the US. This would mean applying US standards as well as their own national standards.

PwC were of the opinion that not being compliant at in June was not a huge problem. However they should at least be on the road to compliance. A large part of which is communication with the investment community.