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IFRS Standards
Germany "Head of the class"
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Note: For several years, numerous listed German companies have
applied IFRS, as required by law in this country. This is true of some
of the companies interviewed for this survey.
Overview
Do you believe you are fully prepared for first-time application of IFRS?
Germany is the country best prepared for the transition
to IFRS. 98% of listed companies consider their
implementation of the new standards to be a success.
This country is one of the leaders in Europe in preparing
their opening balance sheets and simulating 2004
financial statements (91%), results which are as
impressive in absolute numbers as they are in comparison
to other countries.
Even if German companies feel that transition costs are somewhat high, close to 50% consider the change to be worth the cost, and 83% are prepared to publish their first IFRS report in the same timescale as last year. This may be seen as the fruit of early and efficient preparation, because 61% of companies state that the impact of the conversion conforms to their expectations.
Have you already communicated the impact of adopting IFRS to your stakeholders?
Investor communication German companies have worked to ensure their success: 82% have already communicated the impact of IFRS to their shareholders, and the impact is quantified in 81% of cases. Employee training and readiness German companies lead in this area, and the fact that 98% of companies declare they are ready and unworried with regard to the transition, is not accidental. These companies have created the means for their success, which explains why companies here, more than elsewhere, consider the conversion to IFRS to have been a major cost. How do you rate your finance team's knowledge of IFRS?
How do you rate your finance team's knowledge of IFRS?
Thus, 91% of companies believe that their finance teams have good or excellent knowledge of the standards. While only 38% externalised the project, 50% created teams of more than six people to manage implementation of IFRS. This can be seen as a sign of their desire to ensure a successful transition and wish to master the new principles. Financial impact
Do you believe IFRS will aid comparability of financial statements?
German companies strongly support the new
standards, and this explains their dedication in terms of
human and financial resources. 55% believe that IFRS
will improve financial transparency and 71% expect the
new standards to facilitate the comparison of financial
statements.
Are you any more concerned than before by volatility in reporting
under IFRS (as opposed to your previous GAAP)?
Have you changed the way you manage your financial
operations due to IFRS?
Specific standards Whilst financial instruments are the area in which the new standards have been the most challenging, only 25% of German companies state that IFRS has led them to change the way they manage their financial operations. German companies appear to be comfortable with the conceptual framework provided by the IASB and convinced of the new standards' ability to improve comparability of financial statements. In all, 56% believe that scope for interpretation has not increased, and only 35% would like to see further interpretation by IFRIC. The only reservations apparent among German companies concern adaptability of the new standards for particular sectors. 66% believe that the new standards are not well-adapted to their own sector. This does not however imply a lack of trust in IFRS: only 10% of German companies would have preferred the application of European Standards or U.S. GAAP over IFRS. Although German companies have accepted IFRS for their consolidated accounts, among European countries they remain the most attached (50% of them) to their previous standards for their national accounts. |
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