Adoption of International Accounting Standards: Ten commandments for the EU financial services sector

Arora, Harpreet
December 2003
Journal of International Banking Regulation;Dec2003, Vol. 5 Issue 2, p179
Academic Journal
The need to have globally comparable and robust accounting standards has stimulated the development and implementation of a common set of International Accounting Standards (IAS) across the globe. This will benefit organisations, individual investors and the economy as a whole. The new standards are expected to impart transparency in financial statements, ensure easier comparability with competitors, promote efficient global investment, give cheaper access to global capital and facilitate consolidation transactions. In order to facilitate globalisation of capital markets in this area, the European Union (EU) announced its plans to adopt the IAS by 2005. This paper highlights the key business and information technology implications of adopting the IAS by the financial services industry in the EU. The paper focuses on ten areas -- ten commandments -- relating to core business areas of the financial services industry, which are expected to feel the maximum impact. The adoption of the ten commandments calls for strategic planning by the EU financial services industry, mainly in areas of developing new valuation models, improving risk management frameworks, changing mark to market policies, testing asset-liability frameworks and rethinking capital raising plans. There is also a need for information technology to act in concert with management to achieve successful adoption of the ten commandments. The challenge for successful and timely implementation calls for concerted effort from all parties involved to understand the business and information technology implications of the changes and improvements, with an underlying motive to deliver globally uniform and quality accounting statements.


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