Companies that use International Accounting Standards (IASs) vary considerably in their level of compliance, according to the recently published "Financial Times International Accounting Standards Survey 1999." Written by former IASC Secretary-General David Cairns, the survey examines the 1998 financial statements of 125 companies that refer to the use of IASs.
The survey's detailed conclusions include the following:
* Some of Europe's largest companies are among those that refer to the use of IASs but do not comply fully with all IASs.
* The auditors of almost half of the surveyed companies do not express an opinion on compliance with IASs; the auditors refer only to compliance with national standards.
* The auditors of three survey companies express "unqualified opinions" when the companies disclose exceptions from full IAS compliance, in conflict with the International Standards on Auditing.
* Although national and international accounting standards increasingly converge, national bodies have rejected some recent IASs. For example, Canada and Malaysia have continued to allow companies to defer foreign exchange losses.
The survey also deals with the possible endorsement by the International Organization of Securities Commissions (IOSCO) of the use of IASs in cross-border offerings and listings. The earliest possible date for IOSCO endorsement is May 2000, but the process will probably take longer. The survey notes that 43 IOSCO members (including those in Australia and the United Kingdom) have not yet implemented IOSCO's 1993 endorsement of the IASC's cash-flow standard.
Based on the survey's results, Financial Times has made several recommendations for consideration by IASC, IOSCO, national standards-setters, companies, and auditors:
* Full compliance with IASs by companies that purport to comply fully;
* Clear, unambiguous disclosures of exceptions from full compliance by companies that opt for partial compliance;
* Audit opinions that comply with the International Standards on Auditing on the financial statements of all companies that refer to the use of IASs; and
* Greater cooperation between the IASC and the national standards-setting bodies to achieve common improvements in IASs and national accounting requirements.
In the survey report, Financial Times also urged the IASC to take action against audit firms that issue unqualified audit opinions on IAS financial statements that specify exceptions from full IAS compliance. *
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