Parliament makes annual IFRS mandatory for public companies starting in 2012

Yesterday, the Verkhovna Rada, Ukraine’s parliament, approved on second reading law #8194 that requires public joint stock companies, banks and insurers to prepare annual financial reports according to International Financial Reporting Standards (IFRS) starting in 2012, according to an announcement on the Rada’s website. The annual IFRS reports are to be published on company websites, filed with the Securities and Exchange Commission and released to the media by April 30 every year. Other categories of companies are to determine the appropriateness of IFRS reporting internally. Brad Wells: The new law follows years of government talk about a gradual transition to IFRS (a relevant program was initiated in 2007) and follows an announcement by neighboring Russian President Dmitry Medvedev last month that Russia would require annual IFRS accounts by Russian public joint stock companies as of 2012. According to our sources, only 17 Ukrainian companies released public IFRS accounts for 2010, all but one of which is listed on an international exchange (London, Warsaw, or Frankfurt). Thus, the mandatory transition to IFRS by Ukrainian companies listed domestically is a significant step forward in improving the transparency and clarity of financial reporting in the country. At the same time, we note delays in implementation of the law and extensions are very likely due to the time necessary for training and updating of corporate internal accounting systems.