Moore Stephens Highlights New Accounting Rules

Leading accountants Moore Stephens say that from 2005 companies have to produce their accounts in a new, internationally agreed way. Companies with a listing in any European Union state have to produce their financial statements in accordance with International Financial Reporting Standards (IFRS).

EU member states also have the option of requiring IFRS for unlisted companies. And many other countries, too, have decided to move to IFRS.

Writing in Moore Stephens' shipping newsletter The Bottom Line, partner David Chopping says, "The shipping industry is in a slightly unusual position, as many companies have been using international standards for years. But, unfortunately, that does not mean that shipping companies can sit back and ignore the changes.

"At the same time as the move to IFRS, there has been a series of changes to those standards that may affect shipping. These include a new requirement to classify, separately, assets held for sale. This means that accounts will not just reflect disposal of vessels in the year, but also any plans - at least those at an advanced stage - for such disposals. Vessels held for sale will not be depreciated, and may need to be restated immediately prior to being treated as held for sale.

"Another change that is likely to have an impact is the requirement to reconsider residual values annually, using as the basis the value that the company would receive were it to dispose of an asset currently in the condition expected at the end of its useful life. This means that the residual value needs to be changed each year taking account of the prevailing scrap value. It could have a substantial effect on ageing vessels where the remaining depreciation period is shorter."

Moore Stephens also notes that it is not just ships that have to be counted differently, but also what people are paid. Key management remuneration must now be detailed.

Also in Bottom Line, Moore Stephens explains US tax requirements, and interviews Pavel Lyshko, finance director of Russia's FEMCO.