Number-crunch time
Countdown to a Group-wide change that will see implementation of the new
International Accounting Standards (IAS) has begun. How is Rabobank
International (Rl) preparing for the change?
Confidence building
Phased execution
Minimizing impact
Increasing globalization of the activi-
ties and interests of lenders, investors
and companies has led to increasing calls
for a consistent, globally accepted finan-
cial reporting framework. In order to
make sound financial decisions at an
international level, stakeholders and
regulators require information that is
comparable, transparent and reliable.
This is even more relevant in light of
recent accounting scandals such as
Enron, WorldCom and Ahold. Some
experts even suggest that lack of public
confidence in accounting systems is a
significant factor in the current econom
ie downturn.
In recognition of the need to restore
confidence in financial reporting, the
European Union (EU) has called for all
EiU financial institutions and listed com
panies to produce Consolidated financial
statements according to official Interna
tional Einancial Reporting Standards
(widely referred to as IAS) by 2005.
Comparative information in accordance
with IAS is also required for the year
2004. Essentially, this means that
Rabobank's Group-wide conversion of
accounting and financial reporting
systems must be complete by the end of
this year. As of June 2003, selected
offices will restate their quarterly figures
according to IAS rules as part of an
extensive conversion program. Jan Bos,
Head of Control RI says, 'We've had
accounting systems changes in the past
but they were not of this magnitude or
complexity, so our approach to this
change involves much more guidance
and support.'
Implementation of IAS within the
Rabobank Group is being executed in
three phases. In the first phase, a prelini-
inary impact study was undertaken in
cooperation with PricewaterhouseCoop-
ers. This study revealed that IAS is
expected to have both business and
financial impact. The business impact
refers to the amount of effort required
to embed IAS requirements in current
culture, processes and systems. Renate
Hassink, a member of the IAS imple
mentation program for RI explains, 'We
have to establish new methodologies,
collect new data and devise new valua-
tion models. The provision of extra
information on, for example, average
balances and yields on our investments,
might require system enhancements to
extract the correct data from underlying
records. More detailed explanations will
also be required of how we control and
monitor risks.' The financial impact
refers to forecasts that volatility of both
earnings and equity will increase.
With the completion of the preliminary
study in summer 2002, at a Group level,
Rabobank moved onto the next phase:
component evaluation and issue resolu-
28 Rl The Word I
