March 11, 2011
IFRS 9 -- Should Treasurers act now or wait and see?
New research has shown that many corporate treasurers are uncertain about the relevance and implications of new global accounting standards to their treasury operations.
According to the research, undertaken by IT2 Treasury Solutions, a leading provider of treasury management software to corporate treasuries and financial institutions, just 52% of the responding corporate treasurers reported that they were aware of the content and impact of impending changes in IFRS. In Europe, IFRS 9, the standard for classifying and measuring financial instruments which was released in November 2009, will apply to accounting periods beginning on or after 1 January 2013.
Kevin Grant, CEO of IT2 Treasury Solutions, said: “In less than two years, corporate treasurers will have to respond to the onerous financial reporting requirements of IFRS 9. Within one year, the window of opportunity to take the benefits of early adoption will close. IFRS 9 may still be a work in progress, but its scope and adoption timetable strongly suggest that treasurers should be actively evaluating the requirements of compliance.”
IT2’s clients are already reporting that the calculation and data retention requirements for IFRS 9 compliance are demanding. Treasurers should be evaluating the costs and benefits related to the timing of their adoption – in the knowledge that they must adopt within two years, assuming that the present timetable is preserved. Early adopters of IRFS 9 will enjoy the benefit of not having to restate their accounting results retrospectively.
The benefits of early adoption are endorsed by IT2’s client, Wilh. Wilhelmsen, a global maritime industry group. Pål Johan Aronsen, Head of MBO & CM, Wilh. Wilhelmsen ASA, said: “In my opinion, the time to start working with the new regulatory requirements is now. Early preparation means that the necessary historic data needed for full compliance in January 2013 will be available. Companies that are not currently trying to understand and manage the impact of IFRS 9 will be confronted with a potentially substantial catch-up exercise sometime during the next two years.”
Sebastian di Paola, Partner at PwC, commented: "In December the IASB released its Exposure Draft on hedge accounting. This is the one treasurers have been waiting for and it contains some pretty good news, notably for commodity hedgers and in terms of simplifications to the effectiveness testing and hedge designation requirements. There are also proposals in there to help treasury centre FX hedgers. There are a few areas though where treasurers will want to see changes to the proposals, so now is the time to get active in commenting to the IASB. The deadline for comment letters is 9 March, so it’s time to start putting pen to paper:"
Kevin Grant concludes: ‘I certainly expect the level of IFRS 9 awareness and preparedness for IFRS 9 to increase substantially in the coming months, as greater clarity about the final standard emerges. The IFRS 9 clock is ticking, and those who are putting their plans into action will gain tangible benefits, and avoid the costs and complexities of playing catch-up later on.’