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IFRS Standards
Spain: good results but perhaps a little lucky
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Overview
Do you believe you are fully prepared for first-time application of IFRS?
Remarkably, Spain at 91% ranks third in Europe for
the number of companies who feel they are prepared
for the conversion to IFRS. Spain also ranks highly for
the preparation of opening balance sheets and of
2004 financial statement simulations, 85% and 90%
of companies respectively.
However, companies point out the high cost of conversion (54% consider it a major cost), even though the country is within the European average for externalisation of the conversion project (60% versus 59%), and only 38% (40% average in Europe) believe that the cost of transition is justified. In addition, only 88% of companies surveyed believe that IFRS will result in a better understanding of financial statements. Investor communication
Have you already communicated the impact of adopting IFRS to your stakeholders?
Spanish companies are the least concerned in Europe
(34%) with shareholder communication. Only 43% have
quantified the impact of adopting IFRS.
We note nonetheless that 94% of companies will issue their first IFRS annual report at the same date as the preceding year. Spanish companies appear determined to view IFRS as a lesser evil. Employee training and readiness Spain is within the European average in this area. 60% of Spanish companies externalised their conversion project to some extent, which in absolute numbers demonstrates their desire for successful implementation. In addition, finance teams are well-trained and prepared (86% of them), and more than half of companies chose to work with fairly large teams (6 or more people). Financial impact 70% of Spanish companies state that they correctly assessed the impact of the conversion. The two areas mainly affected by the new standards in the view of the Spanish business community are the improved comparability of financial statements (for 87% of companies) and the increase in volatility (for 63%).  70% of Spanish companies state that they correctly assessed the impact of the conversion. The two areas mainly affected by the new standards in the view of the Spanish business community are the improved comparability of financial statements (for 87% of companies) and the increase in volatility (for 63%).  Spain appears to be the country in which IFRS has the smallest impact. Spanish companies anticipate no impact on net equity (69% compared to a European average of 25%), no impact on net income (48% compared to a European average of 25%), and no impact on performance measures (21% compared to a European average of 35%). Specific standards It is clearly in the areas of fixed assets and revenue recognition that the new standards have created the most challenges in Spain. We can further contextualize by considering that Spain, together with the United Kingdom and Ireland, is the country in which IFRS has had the least impact on financial operations (change occurring for only 11% of companies). 
Have you already communicated the impact of adopting IFRS to your stakeholders?
80% of listed Spanish companies would
welcome more interpretation from IFRIC,
compared to a European average of 58%.
Similarly, when considering the specific needs of various sectors, 80% of companies would like more interpretation, compared to a European average of 59%. Compared to the European average, the Spanish appear more open to alternative solutions (52% versus 27% favour European standards, and 22% versus 14% would prefer U.S. GAAP). |
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