Is anyone prepared for 2005?

Mark Takla, Events Director, FT Knowledge

Record market highs and the dot.com boom of the late 1990’s resulted in companies investing heavily in their people. Not only were they handsomely rewarded for playing a part in their employers’ success, but attendance at fee paying training courses, seminars and conferences were also commonplace. Those of us working in the events industry entered the new millennium full of confidence that our businesses would continue to grow in size and strength.

However, if there is one thing history has taught us, it’s that the good times won’t last forever. Since those prosperous days the market has stumbled from one crisis to another. The dot.com bubble burst, September 11 changed our lives forever, Enron self destructed, SARS shut down the Far East, and the war in Iraq discouraged international travel. The turnaround in the industry’s fortunes was swift and dramatic.

FT Knowledge, the training and events arm of the Financial Times group, began its life in London and Singapore in January 2000. The company had been in existence in the United States since 1922 under the auspices of the New York Institute of Finance. With the benefit of hindsight, the timing of these new office openings could have been better!

Budgets were being cut and staff shed on what seemed like a daily basis. Traditional forms of training were suffering as our clients limited their spending to the areas that were deemed critical and would have a direct impact on the success and profitability of their businesses. We therefore decided to focus our efforts on the areas we considered to be “must have’s” and, more importantly, the areas that our clients told us they could not ignore, regardless of the difficult economic climate.

Often the “must have” subjects that keep managers awake at night are those that are time specific with a finite period in which they can be addressed. Deadlines and the desire for a good night’s sleep are very influential in encouraging people to make quick and important decisions.

For example, we may now look back and laugh at the hysteria that surrounded the Y2K bug and mock the prophets of doom who warned of worldwide disasters caused by this little glitch in our computing systems. However, up until just past midnight on January 1st 2000, the consequences of Y2K, whilst relatively unknown, seemed very real and worrying indeed and, no doubt, were the cause of a lot of sleepless nights.

What if something had gone wrong and we hadn’t been prepared for it? Was the new millennium ushered in without the lights going out solely down to the fact that we were well prepared for it? Had we ignored it would the bug actually have plunged us into darkness? Personally, as a technophobe, I don’t know the definitive answer to any of these questions. However, the simple truth is that, at the time, Y2K was an undeniable reality and businesses felt that they had to be prepared to tackle any of the potential outcomes. They were therefore willing to spend a good deal of time and money updating their IT systems and training their staff.

In 2004 many companies now find themselves facing a similar time specific threat, the difference being that this time round they have a clear idea of the consequences of being ill prepared.

In June 2002, the Council of Ministers of the European Union (EU) approved a Regulation requiring all publicly traded companies in all member states to prepare their consolidated financial statements using standards as set out by the International Accounting Standards Board (IASB) by no later than 2005 (companies reporting in US GAAP must comply by 2007). The transition to International Accounting Standards (IAS) has now become a business critical issue for some 7,000 companies in the EU.

Converting to IAS from existing national accounting principles is a mammoth task. Companies will need to update systems and train staff under the new rules in good time for them to be well prepared to comply with the deadline. If they fail to do so they will be answerable to a number of governing and regulatory bodies.

FT Knowledge held its first IAS training seminar in Brussels in April 2002. These events are designed to update attendees on developments in international accounting and give them a solid grounding in IAS in order to prepare them for the transition process.

Since that first event we have welcomed in excess of 1,000 finance professionals to our international accounting events. To date, seminars have also been held in London and Zurich, with plans to host more events on the Continent as well as in North America and Asia.

In a time when the training industry has been in a lull, the demand for information on developments in the field of IAS has been overwhelming. In addition to our public IAS programmes we are now also working with a number of companies on an in-house basis. The realisation of how important the move to IAS is, as well as the amount of work that still needs to be done, has been magnified by the series of high profile corporate accounting scandals that have hit the headlines since the fall of Enron. As I write, the Financial Times is carrying a front-page story on yet another investigation into a leading European company.

To some the transition to IAS may still seem like a fairly simple process. However, there is no quick solution, no magic button that can be pressed to make things happen overnight. Compliance with IAS may not carry the Armageddon like threats of Y2K but the long-term implications for a company that fails to comply are both expensive and potentially disastrous.

FT Knowledge is now entering its 4th year of operations in London, following three years in which we have encountered more obstacles than we could ever have envisaged, as well as some that we could never have dreamt possible. As we welcome in 2004, I’m sure that we all hope for much the same things, including, an end to the acts of God and war that have dramatically impacted our personal and professional lives, the financial markets to continue their recent upturn and, ultimately, a return to the stability and prosperity of not that long ago.