Investors (as well as financial regulators) demand more and more transparency from private companies’ financial accounts. At the same time, more than a half of business owners are sure that increased transparency is one of the main advantages. Those are the results of Grant Thornton International’s business survey for 2010 which was carried out between 7400 entrepreneurs from 36 counties, including Russia.
The survey’s results demonstrate obvious enthusiasm of entrepreneurs who call for more transparency of financial information, which in their opinion is the main factor of successful competition with rivals. Among other advantages of financial accountancy (as it is) business owners named: cutting expenses, decreasing general difficulties, easier access to capital markets, more simple conditions for international trade and, finally, easier conditions for M&As. Here’s how their votes were distributed (it was possible to name more than one options):
Advantages of financial accountancy (global picture)
* Increased transparency – 52%
* Cutting expenses – 44%
* Easier access to capital markets – 37%
* Decreasing general difficulties – 33%
* More simple conditions for international trade – 17%
* Easier conditions for mergers and acquisitions – 12%
Russian business owners answered in a bit different way.
Advantages of financial accountancy (Russia only)
* Increased transparency – 42%
* Cutting expenses – 36%
* Easier access to capital markets – 16%
* Decreasing general difficulties – 26%
* More simple conditions for international trade –7%
* Easier conditions for mergers and acquisitions – 3%
Besides, while doing the research this time, GT’s experts tried to link traditional affairs with a more important event that took place almost 1 year ago (meaning publication of simplified IFRSs - “IFRSs for SMEs”, for small business entities and private companies). Mikhail Frolov, Grant Thornton’s chief of audit in Russia reminds that this document is in fact a separate set of accounting standards, 10 times smaller than the original one (300 different disclosures instead of 3000). From this point of view, even beginners are able to work with IFRSs, which increases their capabilities on the international level.
Business owners were asked whether they were acquainted with “IFRSs for SMEs”. It appears that the most informed businesses are in the European Union (67%); least informed – in Asian-Pacific region (30%).
Surprisingly, Russia is very informed on that subject: 75% of respondents said that they knew perfectly well about introduction of the new version of IFRSs. A record-breaking number of respondents comes not even from Moscow, but from Novosibirsk (92.4%). Moscow is the second with 82%, while Nizhny Novgorod is the third (80.4%). Saint-Petersburg (76%) and Yekaterinburg (41.5%) are doing well, but could be better.
According to Mr. Frolov, small and medium enterprises are offered a whole bunch of simplifications. “Which is why it will be much easier to prepare financial accounting and carry out its audit, whatever company employs “IFRSs for SMEs” for its own good”, - he said.
Wednesday, July 7, 2010
How is your IFRS conversion progressing? What do you need to be doing in the 2010 transition year to help ensure your enterprise makes a successful changeover to IFRS?
http://www.kpmg.com/Ca/en/WhatWeDo/Industries/IndustrialMarkets/PublishingImages/IFRS-Timeline-2-EN.gif
Need to Stay on Track through 2010?
Does your enterprise have IFRS conversion well in hand? If your answer is yes, most likely you have completed your 2010 transition year opening IFRS balance sheet; your comparative Q1 2010 IFRS financial statements are underway; your required systems changes are being implemented; you have a clear strategy for external communications to stakeholders; and your key business impacts are well understood and being addressed.
But, even a carefully planned journey can encounter unexpected challenges. Do keep a close eye on your key deadlines. If you encounter difficulties, always remember that KPMG can help.
Need to Accelerate Your Conversion Project?
In moving through the 2010 transition year, some entities are not feeling happy about their current position. If your enterprise waited too long to get started, or underestimated how much work was required, you may well want to accelerate your IFRS conversion project.
Critically examine your current progress—and if you need to move more quickly, take action now. If you need help, make arrangements to obtain it sooner rather than later. The ultimate deadline is a very real one—don’t put your enterprise or its reputation at risk.
Need to Stay on Track through 2010?
Does your enterprise have IFRS conversion well in hand? If your answer is yes, most likely you have completed your 2010 transition year opening IFRS balance sheet; your comparative Q1 2010 IFRS financial statements are underway; your required systems changes are being implemented; you have a clear strategy for external communications to stakeholders; and your key business impacts are well understood and being addressed.
But, even a carefully planned journey can encounter unexpected challenges. Do keep a close eye on your key deadlines. If you encounter difficulties, always remember that KPMG can help.
Need to Accelerate Your Conversion Project?
In moving through the 2010 transition year, some entities are not feeling happy about their current position. If your enterprise waited too long to get started, or underestimated how much work was required, you may well want to accelerate your IFRS conversion project.
Critically examine your current progress—and if you need to move more quickly, take action now. If you need help, make arrangements to obtain it sooner rather than later. The ultimate deadline is a very real one—don’t put your enterprise or its reputation at risk.
The alternatives to audits
Should the Companies Act go ahead most companies will no longer require an audit, MoneywebTax looks at the alternatives.
The anticipated commencement date for the new Companies Act 2008 (Act No. 71 of 2008), is expected to be October 1 2010.
If the draft regulations are promulgated as they stand then most companies will no longer require an audit.
The new Act distinguishes between two types of companies, namely profit and non-profit companies, with the former comprising public, private and state owned companies, and with a few exceptions, only public, state owned, certain non-profit and private companies holding assets in a fiduciary capacity will be subject to an annual audit.
But what of the companies that do not fall into these categories? What alternatives are there to a mandatory audit?
Companies which do not fall into the above-mentioned categories would be subject to either an independent compilation, independent review in accordance with ISRE 2400 (International Standard on Review Engagements) or an independent review in accordance with ISRS4400 (International Standard on Related Services).
Independent Compilations
The Draft Regulations give no guidelines as to the scope of procedures for an independent compilation, nor do they specify a formal financial reporting framework (such as IFRS for SMMEs). Accordingly, there is concern that this will result in inconsistencies amongst compilers, and, since only registered auditors are subject to regulation by IRBA, there will be little regulation as to the standards and quality of financial statements prepared in terms of an independent compilation outside of those prepared by registered auditors.
Independent Review in accordance with ISRE2400
A review under ISRE2400 requires that the auditor or independent profession accountant (IPA) properly plans the engagement and obtains sufficient knowledge of the business so as to determine the extent and nature of the review procedures. The procedures performed would typically include inquiries of management, high level balance sheet and income statement analytical procedures and limited high level substantive procedures (such as inspection of reconciliations, aged analysis's and review of minutes and company records).
So while the extent of the procedures might be less than those of an audit, the implicit cost savings are likely to be largely offset by the use of higher level resources by the auditor or IPA. Accordingly, it is not likely that there will be significant cost savings for companies subject to this type of engagement under the new Act, when compared with an audit.
Independent Review in accordance with ISRS4400
An ISRS4400 engagement will require typical audit type procedures, such as inquiry and analysis, observation, recalculation and obtaining confirmations and the scope of these procedures to be performed will be agreed upon between the auditor/IPA and client. As such, it is difficult to compare the cost thereof to an audit in general and such a comparison will have to be done on an individual engagement basis, depending on the scope of procedures agreed upon to be performed.
Whilst there has been no indication yet that these and other key aspects of the Act itself will be reviewed before being affected, there have been a number of submissions made to address what appear to be onerous elements of the Draft Regulations. How this will be addressed and the final outcome, remains to be seen.
*Andrew Pitt, director at Moore Stephens South Africa
The anticipated commencement date for the new Companies Act 2008 (Act No. 71 of 2008), is expected to be October 1 2010.
If the draft regulations are promulgated as they stand then most companies will no longer require an audit.
The new Act distinguishes between two types of companies, namely profit and non-profit companies, with the former comprising public, private and state owned companies, and with a few exceptions, only public, state owned, certain non-profit and private companies holding assets in a fiduciary capacity will be subject to an annual audit.
But what of the companies that do not fall into these categories? What alternatives are there to a mandatory audit?
Companies which do not fall into the above-mentioned categories would be subject to either an independent compilation, independent review in accordance with ISRE 2400 (International Standard on Review Engagements) or an independent review in accordance with ISRS4400 (International Standard on Related Services).
Independent Compilations
The Draft Regulations give no guidelines as to the scope of procedures for an independent compilation, nor do they specify a formal financial reporting framework (such as IFRS for SMMEs). Accordingly, there is concern that this will result in inconsistencies amongst compilers, and, since only registered auditors are subject to regulation by IRBA, there will be little regulation as to the standards and quality of financial statements prepared in terms of an independent compilation outside of those prepared by registered auditors.
Independent Review in accordance with ISRE2400
A review under ISRE2400 requires that the auditor or independent profession accountant (IPA) properly plans the engagement and obtains sufficient knowledge of the business so as to determine the extent and nature of the review procedures. The procedures performed would typically include inquiries of management, high level balance sheet and income statement analytical procedures and limited high level substantive procedures (such as inspection of reconciliations, aged analysis's and review of minutes and company records).
So while the extent of the procedures might be less than those of an audit, the implicit cost savings are likely to be largely offset by the use of higher level resources by the auditor or IPA. Accordingly, it is not likely that there will be significant cost savings for companies subject to this type of engagement under the new Act, when compared with an audit.
Independent Review in accordance with ISRS4400
An ISRS4400 engagement will require typical audit type procedures, such as inquiry and analysis, observation, recalculation and obtaining confirmations and the scope of these procedures to be performed will be agreed upon between the auditor/IPA and client. As such, it is difficult to compare the cost thereof to an audit in general and such a comparison will have to be done on an individual engagement basis, depending on the scope of procedures agreed upon to be performed.
Whilst there has been no indication yet that these and other key aspects of the Act itself will be reviewed before being affected, there have been a number of submissions made to address what appear to be onerous elements of the Draft Regulations. How this will be addressed and the final outcome, remains to be seen.
*Andrew Pitt, director at Moore Stephens South Africa
Accounting firms foresee high sales due to IFRS
Korea’s big three accounting firms were projected to report higher sales for fiscal year 2009, primarily due to a decision to adopt the International Financial Reporting Standards.
According to industry sources yesterday, Deloitte Anjin LLC, the Korean unit of Deloitte Touche Tohmatsu, was estimated to see the biggest rise of 13.8 percent from a year earlier to post estimated sales of 237.7 billion won ($194 million) in fiscal year 2009, which ran from April 2009 to March 2010.
Samil PricewaterhouseCoopers, the local unit of PricewaterhouseCoopers, was projected to see a 9 percent rise on-year to estimated sales of 428.9 billion won. Samjong KPMG Inc., a Korean unit of the global service firm KPMG, was expected to tally 174.4 billion won in sales, up 7.4 percent from a year earlier.
“Demand for IFRS-related services has gone up for the last two years,” said an official at Deloitte Anjin. “Most large firms already completed their preparations earlier last year, while a lot of small and midsized firms began preparatory procedures for adoption of IFRS [in the second half of 2009].”
Accounting firms generate sales through four main services: audit and assurance; financial advisory services; performance and process improvement; and tax. According to major accounting firms, the introduction of IFRS has especially boosted demand in the former two categories.
Experts from the accounting industry believe domestic companies will be ready to adopt IFRS by 2011. Jung Do-sam, executive director at Samil, said, “Firms that are not yet prepared for the new system are mostly small and midsize ones, but those companies would take a shorter period of time, probably around two to three months.”
According to industry sources yesterday, Deloitte Anjin LLC, the Korean unit of Deloitte Touche Tohmatsu, was estimated to see the biggest rise of 13.8 percent from a year earlier to post estimated sales of 237.7 billion won ($194 million) in fiscal year 2009, which ran from April 2009 to March 2010.
Samil PricewaterhouseCoopers, the local unit of PricewaterhouseCoopers, was projected to see a 9 percent rise on-year to estimated sales of 428.9 billion won. Samjong KPMG Inc., a Korean unit of the global service firm KPMG, was expected to tally 174.4 billion won in sales, up 7.4 percent from a year earlier.
“Demand for IFRS-related services has gone up for the last two years,” said an official at Deloitte Anjin. “Most large firms already completed their preparations earlier last year, while a lot of small and midsized firms began preparatory procedures for adoption of IFRS [in the second half of 2009].”
Accounting firms generate sales through four main services: audit and assurance; financial advisory services; performance and process improvement; and tax. According to major accounting firms, the introduction of IFRS has especially boosted demand in the former two categories.
Experts from the accounting industry believe domestic companies will be ready to adopt IFRS by 2011. Jung Do-sam, executive director at Samil, said, “Firms that are not yet prepared for the new system are mostly small and midsize ones, but those companies would take a shorter period of time, probably around two to three months.”
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