The switch to International Accounting Standards by 2005 as planned by the EUwill mean that many Smaller Quoted Companies (‘SQCs’) risk breaching bank covenants, missing accounting deadlines, failing to manage expectations of stakeholders and failing to factor in potential recruitment and IT costs, warns business and financial adviser Grant Thornton. As a result, SQCs could face wrangles with their bankers and shareholders, may be put under scrutiny by the Financial Reporting Review Panel, and risk damage to their reputation and share price. Explains Grant Thornton Audit Partner, Brian Shearer: ‘The problem with moving to IAS is that many companies are somewhat complacent because the regulation does not come into force until 2005. However the real deadline is 2003 because companies will need an IAS starting point for their comparative figures. ‘More imminently by the end of next year, many IAS requirements will be brought into UK accounting standards. It can’t be stressed enough the need for SQCs to begin their preparation now.’
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