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NEW DELHI, Feb. 15

RESEARCH by the six largest accountancy firms in the world shows that an overwhelming majority of nations - over 90 per cent of a total 59 countries surveyed - intend to converge with International Financial Reporting Standards (IFRS).

The findings - taken from GAAP Convergence 2002 - reveal that 72 per cent of the countries intending to move towards IFRS have a formal policy in place to achieve this. In most cases, it is aimed initially at listed companies. The results were drawn from research undertaken to gauge the extent and maturity of IFRS preparations around the globe.

According to the Chairman and Managing Partner, Ernst & Young India, Mr K.N. Memani, "This year's survey reveals that great progress is being made towards achieving the vision of a single worldwide language of financial reporting, especially for listed companies."

"Our findings indicate that the International Accounting Standards Board (IASB) is increasingly viewed as the appropriate body to develop a global accounting language that provides high quality financial information and enhances transparency," he said.

The fact that a vast majority of countries have an active agenda for IFRS convergence, Mr Memani said, is very encouraging, but there is still much work to be done. Despite greater moves towards convergence, the survey indicates that obstacles still remain to achieving full and consistent adoption of the standards in the near future, he said.

In the course of the survey, 51 per cent of the countries indicated that the complex nature of some of the international standards - in particular, those relating to financial instruments, and others incorporating fair value accounting - is a barrier to convergence in their country. This apart, 49 per cent of the countries surveyed also cited the tax-driven nature of their national accounting regime as a hurdle. Consequently, many countries are currently limiting implementation of IFRS to listed companies, rather than extending it to all companies.

The survey respondents also stressed the importance of getting better and timely access to national language translations of the new standards and interpretations. While translations of international standards were available in 70 per cent of the countries covered, in many cases, the translations were not sanctioned by the IASB. In addition, in nearly one-third of the countries where IFRS are available in the national language, the translations were not considered to be available quickly enough.

Another area of challenge identified was the availability of IFRS training, for which demand is expected to build up significantly as the world moves towards new standards. Promisingly, while the survey found that in 80 per cent of the countries covered, IFRS training now is part of the university curriculum, over one-third of those countries expressed concern that coverage was still limited or offered by only a few universities within the country.

Based on the survey findings, GAAP Convergence 2002 has recommended a number of principal action items for all parties involved in achieving further convergence.

Commenting on the outcome of the survey findings, Mr Memani said, "the accounting profession has actively promoted the development of global standards, but must increase its efforts to achieve the goal. Greater commitment is now required to make IFRS available throughout the world, in the required national languages, through training, and by assisting those countries that have started the convergence process to complete it."

The firms involved in the GAAP Convergence 2002 project were BDO, Deloitte Touche Tohmatsu, Ernst & Young, Grant Thornton, KPMG and PricewaterhouseCoopers.

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