UK slow to prepare for accounting regulations

UK companies must start preparing their IT to support new international accounting regulations, analysts say.

By the beginning of 2005, European companies will have to conform to International Accountancy Standards Convergence (IASC) rules, intended to force organisations to keep proper accounts and to avoid disasters such as Enron.

Organisations that have yet to start work on compliance projects could encounter IT problems, according to analyst the Meta Group.

'This is a time tomb,' said Rakesh Kumar, vice president international, enterprise data center strategies at Meta.

'By 2005 all published accounts have got to conform to international accounting standards and not UK standards, and less than 20 per cent have done anything about it.

'If you consider the data management requirements for this, it's a major headache,' Kumar said.

The IASC rules and Sarbanes-Oxley in the US, will mean global companies will have to unify their IT systems and ensure that areas such as disaster recovery and data management are consistent.

If all goes to plan, organisations will have highly organised, open data, improving trust and data integrity.

What it will also mean is the information element of IT will play a more high profile role, with the technology emphasis being pushed to the sidelines for the first time.

'Information will become more important,' Kumar said. 'Certainly with Sarbanes-Oxley it's the information flow and the requirement to keep that information current that will put pressure on the IT department.'

If European businesses wait much longer to tackle the new regulations, they run the risk of doing a last minute bodge job.

'This isn't as bad as Y2K,' Kumar said, 'and if people get their IT houses in order it doesn't take and awful lot of effort to meet the standards. And I would rather these companies did it in a controlled manner than in a panic.'

Research conducted by Meta has discovered that 65 per cent of US companies surveyed are engaged in some kind of Sarbanes-Oxley project. And 88 per cent of multi-national companies are undertaking the projects on a global basis.