IFRS Standards
France: apathetic support

Overview

With 80% of companies declaring themselves fully prepared for the IFRS conversion, compared to an average of 87% across the continent, France trails behind the rest of Europe. This number is illustrated by the fact that only 51% of French companies have completed a simulation of their 2004 financial statements, which is 15% below the European average.

We should note however that, for 15% of companies surveyed, the financial year ends after 31 December 2004, and for 3% the year will close on 30 June 2005. When considering only those companies whose financial year closed last 31 December, the percentage declaring themselves fully prepared reaches 93%, or 6% higher than the European average.

Investor communication

French companies who consider themselves ready for the conversion have all communicated with shareholders the impact of the new standards. More generally, with a national rate of 57%, France is one of the leaders in the Union in terms of communication. Two thirds of French companies have already quantified this impact and those who have not yet done so plan to carry out quantification by September, over half by June.

With only a quarter of French companies, compared to almost half across Europe, believing that IFRS will improve understanding and transparency of accounts, and 37% versus 63% believing they will facilitate comparisons between countries, France is without contest the country with the most sceptical attitude towards the new standards. This explains, in part, the weak support by French companies for implementation of the standards.



Employee training and readiness

Only 54 % of companies surveyed indicate that employees have received specific training in the new standards. Here again, the late year-end date may in some cases affect this result.

Almost 57% of companies partially or completely externalised their conversion with only 43% managing their project internally. French investment was no lower than that of its neighbours, because the size of the French conversion teams is slightly higher than the European average at 6 employees.

Financial impact

France is among the countries the most surprised by the financial impact of IFRS (21% felt the impact was greater than expected, compared to 14% across Europe).

French companies express some of the greatest concern in Europe with regard to the increased volatility caused by the greater conformity of accounting to economic substance (60% compared to 45% across Europe).



With 50% of companies who believe that the benefits of adopting IFRS do not justify the cost of conversion, France also appears as the country with the least favourable attitude overall to the new standards.








Specific standards

As in the rest of Europe, financial instruments (for over 40%) and fixed assets (for 20%) create the greatest challenges for French companies. Employee benefits and pensions are not seen as creating major issues, while share-based payments are. France is one of the countries where the least change has taken place in managing financial operations.

The French are the most likely in Europe (more than 60% compared to 40% in Europe) to believe that application of IFRS increases the margin for interpretation.

They demonstrate yet again their scepticism towards IFRS in the belief, for over 60% compared to 50% on average across Europe, that the standards are not well adapted to their business sector.

As elsewhere in Europe, French companies do not tend to prefer the development of European Union standards, and they are paradoxically the most supportive of applying U.S. GAAP (28% or double the average), not least because around 30 large French companies are listed on Wall Street.

Unsurprisingly, given their critical attitude towards IFRS, French companies are more likely (34% versus 27%) to retain existing standards for their domestic accounting.