Mazars 2005 survey on the changeover to IFRS:
European companies are ready, but not convinced

According to a survey by Mazars, published on June 8th 2005, European listed companies are still sceptical about the capacity of IFRS to improve the comparability and transparency of financial statements. In particular, only 63 % believe that IFRS will facilitate comparability and less than half (47%) believe they will enhance transparency.

These were the results of a survey carried out by Mazars involving 556 European listed companies in 12 countries (Germany, Belgium, Spain, France, Italy, the Netherlands, the United Kingdom, Ireland, Luxembourg, Poland, the Czech Republic and Turkey).

This European survey is the second one carried out by Mazars on this subject. In 2003, the survey covered seven countries (Germany, Belgium, Spain, France, Italy, the Netherlands and the United Kingdom). This survey revealed that companies were tending to take a positive view of the change of financial standards: 79% thought that IFRS would improve the reliability of financial information and 73% hoped that the new standards would lead to greater transparency and comparability.

Today, although 87% of European companies declare themselves ready for the first application of IFRS, they are not convinced of the benefits of the new standards.

An uncertain transition phase

The results show that European listed companies are still in an uncertain transition phase.

However if European do not yet seem convinced that IFRS will improve transparency and comparability, they do not see the adoption of US Gaap or strictly European standards as a preferable alternative : in fact, only 27% of European companies would like to adopt European norms and only 14% would opt for US Gaap.

What will change with the adoption of IFRS?

For 73% of European companies, the changeover to IFRS will not change the way they run their financial operations and only 46% think that IFRS will increase volatility.

However, European companies highlighted 4 major areas in which IFRS will have a significant impact:
• Financial instruments (64 %)
• Fixed Assets (44 %)
• Retirement plans and pensions (33 %)
• Share-based payments (22%)

The majority of European companies (51%) believes IFRS increase the margin for interpretation and 67 % would welcome more interpretation from IFRIC (International Financial Reporting Interpretations Committee).

On average, the results are encouraging

Although a majority of European companies think that IFRS are not well adapted to their sector, of these 60% would like to see more complete sectorial guidelines, on average, the results are encouraging. 87 % of European companies declare themselves ready for the first application of IFRS.

74 % have already prepared their opening balance sheets under IFRS and 66 % have carried out a simulation of their 2004 financial statements under IFRS