Companies have only three months left to prepare their IT systems for sweeping changes to financial reporting.
From January 2005, the International Financial Reporting Standards (also referred to as the International Accounting Standards) will come in to force for all listed companies in the European Union. There are about 36 separate standards ranging from how to account for fixed assets to pensions.
They will replace the Generally Accepted Accounting Principles (GAAP) standards used by each country to prepare accounts. Their introduction will affect more than 7,000 companies and their financial information and accounting systems.
The new regulations come into force at a time when IT departments are busy juggling other compliance projects, such as for Sarbanes-Oxley, and for financial firms Basel 2.
Hazel Powling, head of international accounting standards implementation at the Institute of Chartered Accountants in England and Wales, said the impact of the accounting changes on IT systems would vary according to each industry. She said financial services companies, one of the heaviest investors in IT, would be among the hardest hit.
"They [financial firms] have had to make significant changes to their IT systems, which has been very costly," she said. "The biggest challenge has been in getting a complete overview of the information they track in their accounting systems."
To help IT organisations struggling with the new reporting standards, the Business Application Software Developers Association has published an updated guide on the IT implications of forthcoming regulations.
The guide also explains the various international accounting standards and the changes needed in software to accommodate them.
The IT implications of the accounting harmonisation span data collection, system upgrades and parallel processing. Treasury, accounting and large enterprise resource planning systems will be among the IT systems affected by the changes.
The Basda guide includes the final recommendations of the International Accounting Standards Board.
The Basda IFRS white paper costs £50 to non-Basda members. It can be ordered from the Basda website