The warning from industry experts came as the Department of Trade & Industry published a consultative paper outlining the government's proposed approach to European Union standards.
Under an EU directive, all listed companies within the EU will have to meet the new accounting rules, which replace national accounting standards and harmonise reporting standards.
Final guidelines for the international financial reporting standards are due to be published by the International Accounting Standards Board later this week. Although the standards do not come into force until 2005, companies need to record financial information for 2004 under international reporting standards alongside existing UK rules for comparison with 2005.
IT systems affected by the rule change include the treasury, general ledger, accounting and enterprise resource planning systems.
These systems will have to meet a range of new requirements, including providing more information to meet disclosure standards, measuring the value of assets and liabilities in different ways and adding new data fields to financial instruments such as bonds or derivatives.
The introduction of the international reporting standards coincides with a number of other financial regulations, such as Basel 2 and Sarbannes-Oxley, each of which will have implications for IT systems.
"The imminent arrival of international financial reporting standards is generally seen as an issue for accountants rather than IT professionals, but the new global accounting regime will have a major impact on the configuration of information systems," said Colin Bezant, a director at the information risk management division of KPMG.
He added that IT departments needed to take the lead in compliance projects within companies.
"Typically the implementation of consolidation software is led by the accountants and financial controllers who use them on a daily basis," he said.
"However, with requirements for information compliant with the international financial reporting standards just a few months away, it is doubtful whether a typical financial controller will have the time or the skills to project-manage the reconfiguration or introduction of a consolidation system."
Cubillas Ding, senior financial technology analyst at Datamonitor, advised firms to minimise the amount of work needed to meet forthcoming rules by using the same software to carry out similar tasks on separate projects."We are seeing the emergence of some of the suppliers, such as SAP and PeopleSoft, that combine functions such as risk calculations needed for Basel 2 and IAS on a single financial database," he said.
Planning for IAS
- Finance and IT teams should plan compliance work together
- Consider how systems and resources can be run in parallel (collecting data to UK and IAS rules) in 2004
- Look for overlap between different compliance projects to meet other forthcoming regulations
- IT departments should check that their software suppliers have modules in place to meet IAS.