Thirty-two percent of financial services executives surveyed at a recent meeting said they expect the process of simplifying financial reporting to have a significant impact on their companies.
An instantaneous electronic poll by PricewaterhouseCoopers obtained that result and a variety of other findings from 400 senior finance executives at the third annual PricewaterhouseCoopers Finance Executives Forum held in New York.
Twenty-six percent said they expected an impact from "operationalizing risk management," and 22 percent mentioned systems integration.
Concerning the biggest challenge for the industry as a whole over the next two-to-three years, the top response given was the "decline of U.S. competitiveness in the global marketplace" followed by "competition for talent," PwC said.
When polled on which current Financial Accounting Standards Board (FASB) initiative will have the greatest impact on their business or finance team in the coming year, 34 percent said "Fair Value Measure" (FAS 157) and 28 percent said "Fair Value Option" (FAS 159).
FASB issued FAS 157 "Fair Value Measure" in September 2006, applying a new standard to use whenever other standards either require or permit assets or liabilities to be measured at fair value.
When asked how they are resourcing this, 46 percent of survey respondents said they are relying on their own internal finance department, and 21 percent are using existing valuation experts. One-quarter, however, have turned to third-party valuation professionals.
The SEC's decision to eliminate reconciliation requirements for foreign issuers is the latest in a series of action to streamline financial reporting through the convergence of International Financial Reporting Standards (IFRS) and U.S. Generally Accepted Accounting Principles (GAAP), PwC noted
When polled, 88 percent of PwC survey respondents agreed there should be a single, global set of financial reporting standards. Yet, 68 percent said they are not prepared to give up control of established U.S. accounting standards.
When asked specifically what the reporting standard should be, 34 percent said IFRS, the standard used largely by the rest of the world outside the United States. Forty-four percent suggested keeping two standard setters in the world but continuing to work toward converging standards, and 13 percent said standards should be something other than either U.S. GAAP or IFRS.
Fifty-five percent of survey respondents said they expect there to be a single, global financial reporting standard by 2015. Another 22 percent don't expect convergence until 2020. Only 6 percent expect convergence by 2010, and 7 percent think that true convergence will never take place.
One in five financial services industry executives said they believe the U.S. economy will enter into a recession within the next 12 months.
Only 10 percent said the decline in the housing market would be the biggest challenge their organization will face in the year ahead. Thirty percent said they were concerned or extremely concerned about the adverse impact that subprime mortgage market issues could have on their organization.
Forty-nine percent were only somewhat concerned about the subprime issue, and 21 percent said they are completely unconcerned about it.
The Forum is a one-day discussion about the future of the financial services industry, best practices emerging from finance and compliance departments, and technical issues in the changing financial services industry. Twenty-four percent of those attending were from the insurance industry.
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