Europe’s oil and gas CFOs braced for accounting change
It is being labelled as the biggest accounting shake-up in 25 years. And oil and gas utilities throughout Europe must take note. International Financial Reporting Standards will soon replace national accounting standards, and according to PricewaterhouseCoopers, CFOs are asking for the necessary investment to implement the changes.
Utilities must be able to analyse the impact of IFRS on corporate performance, create systems to report to regulatory bodies, and educate investors and shareholders about the changes. This must take place before IFRS implementation in 2005.
With IFRS in place, corporates across the EU will be able to offer directly comparable corporate information. But the increased transparency will bring fresh issues. Investor relations will become ever more of an issue for the oil and gas utilities, while non-financial barometers - such as customer satisfaction - will increase in importance.
"The change to IFRS is expected to trigger larger swings in reported profits, reflecting fluctuations in derivatives values. Lack of awareness and understanding across the broader financial community could create investor concern and share price volatility," says Manfred Wiegand, global utilities leader at PwC.