Preparing for IFRS: disclosures by FTSE 100 companies [poster presentation]

The transition to International Financial Reporting Standards (IFRS) by EU listed companies in 2005 presents a challenge to preparers, auditors and users of financial statements. With this in mind, the Committee of European Stock Exchange Regulators issued a recommendation to its members in December 2003 that listed companies be encouraged to disclose information in their 2003 financial statements regarding their plans for the move to IFRS, and major differences identified to date between their present accounting policies and IFRS. This paper aims to identify areas of the transition that seem likely to be problematic. The findings have relevance to policy makers in predicting the level of compliance with IFRS; and to preparers, auditors and users in identifying areas requiring particular attention. The aims are achieved through an analysis of disclosures made about the transition to IFRS by some of the largest companies in the EU (the FTSE 100). The extent of disclosures was found to be varied, suggesting a range in the degree to which companies are prepared for (or are willing to disclose regarding) the transition to IFRS. Nevertheless, a number of areas expected to have a significant effect on reported figures were identified (e.g. deferred tax, recognition of items previously kept off balance sheet and fair value adjustments). The potential materiality of these items confirmed the importance of providing early warning of the effect of making the transition to IFRS