Listed companies must be IFRS compliant by 2011

Harshini PERERA

All listed companies in Sri Lanka should convert to consolidated company accounts in compliance with the International Financial Reporting Standards (IFRS) from 2011.

There are over 100 countries that have adopted the IFRS system and by 2011, more than 150 countries would have adopted IFRS including India, China, Brazil, Korea, Accounting Advisory Services FPMG India Executive Director Vishwanath Venkataraman said.

Speaking at a discussion on adopting IFRS in a country he said the IFRS will be a fundamental change to financial reporting of a company and the company should be prepared to make changes and updates to the existing standards.

The IFRS needs compliance with data requirement from the subsidiaries, joint ventures and associates for consolidation purposes. It requires a modification in reporting system and training finance personnel.

There are certain misjudgments about IFRS adoption in all listed companies. Some of them are the assumption that IFRS requires fair valuation of everything.

The IFRS lays too much emphasis on management which is another assumption.

It is also believed that global standards like IFRS do not take local conditions into account which is also another misjudgment about IFRS.

He said the strong leadership, proper management, resources skills and timing is needed in the process of adopting IFRS to a company. "It should start with accountancy and go beyond other components of the company. The IFRS needs a detailed assessment concerning the future.

Therefore companies should be prepared to put a system in place", Venkataraman said.