IFRS will Become More Complex - A Handelsblatt interview with Paul Rothenberger

Paul Rothenberger, Managing Director of FERNBACH-Software GmbH

A Handelsblatt interview with Paul Rothenberger, Managing Director, FERNBACH-Software GmbH.

In view of recent events, the German newspaper ‘Handelsblatt’ has taken up the topic of IFRS and interviewed Paul Rothenberger, Managing Director of FERNBACH-Software GmbH.

A translation of the interview is available below.

Paul Rothenberger: The Situation will Become More Complex

Paul Rothenberger is Managing Director of FERNBACH-Software GmbH, a provider of financial software solutions of IFRS balance sheets and Basel II. Yasmin Osman, Editor of ‘Handelsblatt’, spoke to him about accounting regulations for banks.

Handelsblatt:
You have observed that a lot of banks are already experiencing problems with IFRS. How great are these difficulties?

Paul Rothenberger:
Roughly 30 percent of the banks interviewed were not satisfied with the length of time it takes to prepare their own financial statements under the International Financial Reporting Standards (IFRS). No such problems have been encountered with the German accounting regulations (HGB).

Handelsblatt:
Where do the greatest problems lie?

Paul Rothenberger:
The regulations on impairment are one of the biggest problem areas for banks preparing financial statements under IFRS. About 50 percent consider the quality of the data used to determine impairment to be inadequate, which in turn makes people wonder just how reliable financial figures are that have already been published. And now the International Accounting Standards Board (IASB) has added to the complexity with the new regulations.

Handelsblatt:
What is the reason for that?

Paul Rothenberger:
When IFRS was first introduced, auditors allowed for a more liberal interpretation when contentious issues arose. However, this changed as auditors gained more experience. Furthermore, many banks consider IFRS to be a necessary evil and the accounting regulations have not been incorporated into internal controlling measures. This means that business strategy is planned and budgeted according to the HGB and that only a few banks conduct financial controlling on the basis of IFRS statements.

Handelsblatt:
Isn’t it mostly the smaller banks who experience these problems?

Paul Rothenberger:
That is a fallacy. There are most certainly large banks that have not yet completely adjusted to IFRS. Medium-sized banks are more flexible and use IFRS for internal controlling purposes.