As the Dec. 31, 2004 deadline looms for the European Union's conversion to the new International Financial Report Standards (IFRS), Fitch expects no material rating actions due to the conversion, and a long, slow process as EU companies will likely be in a transitional phase with respect to IFRS for several years while existing national accounting standards continue to play a prominent role.
While Fitch does not doubt that the financial statements of EU companies will ultimately become more useful and certainly more consistent across countries, several risks are present.
'Its not just short-term risk of potential misstatements,' said Joseph St. Denis, Senior Director, Fitch Ratings. 'There are uncertainties associated with unified auditing and enforcement regimes for IFRS, and EU organisations will need to take decisive steps to put appropriate infrastructure in place to ensure effectiveness and consistent application.'
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