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Moody's warns about IFRS anomolies between EU firms

The impact of European Union regulation requiring all listed companies, including banks, to comply with International Financial Reporting Standards (IFRS) as from January 1 2005 will vary from institution to institution in light of the various differences between IFRS and current national standards, Moody's Investors Service says in a new Special Comment. As a result, EU banks should communicate their views on the implications of the changes as soon as they are in a position to do so, the rating agency adds.

The introduction of IFRS will, in Moody's view, represent an important step in lowering further the barriers to cross-border trading in securities by ensuring that company accounts throughout the EU are transparent, reliable and comparable. "However, we also expect it to pose a major challenge to the entities in question - not only in the adoption of the new standards, but also in the task of explaining their impact to users of financial information," explains Yaroslav Sovgyra, senior accounting specialist for European banks and author of the report.

In order to help investors and analysts understand the impact of IFRS on their financial position and performance, EU banks should begin communicating their expectations of the implications throughout 2004, with the banks being in a position by 2005 to explain the numerical impact of IFRS on their financial statements.

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