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28th April 2004

London – 30% of companies have not yet, or have only recently, started preparations for International Accounting Standard (IAS) 39 implementation, according to a new survey conducted by Risk Magazine and Reuters, the global information provider. The survey also found that 45% of respondents disagreed that IAS 39 will ensure companies take prudent actions to manage risk exposure.

The introduction of IAS 39 will represent a radical change in operational workflow management and accounting procedures for many companies including the fact that all financial assets and liabilities have to be recognised on the balance sheet. For example, derivative transactions have traditionally been reported on a cost basis, but under IAS 39 these will have to be reported in the profit and loss account at fair value.

Two thirds of respondents said implementation of IAS39 would lead to changes in their company’s risk management strategy. But in the area of Hedge accounting the majority of those surveyed (37%) said that the new IAS39 regulation will have a negative impact.

Sebastien Roussotte, Global Head of Risk at Reuters, comments, "There are clearly some differences of opinion on the IAS39 regulation reflected in the results of the survey. However, the fact that 30% of respondents have not yet, or have only recently, started preparations for IAS39 implementation is perhaps indicative of how much uncertainty there has been in the industry about the regulation. This makes flexibility within the infrastructure used to support compliance the number one concern to most organisations right now."