Grace Kennedy takes on new reporting standards

 The Grace Kennedy and Company Limited in its Interim Report to Stockholders indicated the adoption of International Financial Reporting Standards (IFRS), formerly International Accounting Standards (IAS).  They are one of the first Caribbean companies to make such an announcement. The new IFRS is another outcome of the European Union. In May 2002 the European Parliament ruled that the consolidated financial statements of substantially all companies domiciled in the EU whose shares are listed on the EU Stock Exchange must follow IFRS beginning January 2005.  The IFRS seek to create comparable, reliable and transparent financial statements that will facilitate greater cross-border capital raising and trade. The objective is to promote uniformity across the EU’s many borders. “As the business community gets more global and companies list across stock exchanges, the need for consistent worldwide reporting standards intensifies.” 

This is good news as firms operating across EU borders can apply one set of standards and no longer have to restate financial statements.
Companies listed on regional stock exchanges, will have to follow Grace Kennedy’s lead and apply IFRS by January 2005. Small steps, as evidenced by the adoption of IAS 39, are being taken in preparation for this eventuality. 
In the long term a new international standard that represents critical aspects of US GAAP and IFRS will emerge.  Companies like Angostura with American subsidiaries  will welcome this move — restatements to produce comparative statements at an international level, will no longer be needed.
The International Accounting Standards Board (IASB) expects to also complete in 2004 (or early 2005) IFRS dealing with:
- business combination procedures (including accounting for non-controlling interests)
- performance reporting
- post-employment benefits
- revenue and liabilities, consolidations (including special purpose entities)
- segment reporting
- financial institutions (deposit taking, lending and securities activities).
Companies may elect to adopt early either individual standards or subsets of standards from this set, as done by Grace Kennedy. 

External auditors and regional regulatory bodies — ICATT and Stock Exchanges —  have a critical role to educate and provide technical assistance to ensure a seamless transition from IAS to IFRS for regional companies.

Maxine Attong is a financial and management consultant
email: enhanceink@hotmail.com