Investors throughout the world demand more transparency from private companies – Grant Thornton

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.