EU may have to accept US GAAP next year

Charlie McCreevy says it will be Europe's turn to accept accounts in US GAAP next year.

'Now it will be Europe's turn to accept accounts in US GAAP,' said McCreevy earlier today. 'This decision will have to be taken next year. And it is certainly my intention to propose that no reconciliation to IFRS will be needed for companies filing their accounts under US GAAP. This is the only sensible way forward.'

The internal markets commissioner was speaking at an Audit Regulation conference in Brussels, hosted by the Federation of European Accountants.

McCreevy also praised the US for dropping the reconciliation statement requirement for foreign issuers, but slammed Europeans who dampened last week's announcement, by still calling for acceptance of localised IFRSs.

'I hear some voices who say this is a poor outcome,' said McCreevy, quoting one estimate of the saving for companies listed in the US at 2.5bn Euros. 'They think the SEC should have accepted an EU brand of IFRS along with IFRS as adopted by the International Accounting Standards Board or IASB. I am not sure if these critics suffer from amnesia. Let us not forget the facts here. We in Europe have decided to go for IFRS because we rightly believed in the virtues of having a single accounting language. And when I say "we" I mean all of us, including the Council of Ministers and the European Parliament.'

The commissioner added that 'more' governance was needed at the International Accounting Standards Board, and admitted that there have been some improvements.

'We need to have a close look at the standard setting process by the IASB: more transparency, better consultations, impact analyses at an early stage, thorough field-testing of any new standards to avoid unwanted or even unexpected consequences,' he warned. 'But above all new standards only where they are really necessary – I shall be very vigilant on that in the future.'

European companies and firms can, however, look forward to oversight by home regulators, said McCreevy.

'The directive on statutory audit allows the commission to recognise the equivalence of third-country oversight systems of auditors. As a result the inspections of audit firms carried out by their home oversight bodies can be recognised as being equivalent to our inspections. Home country oversight will thus replace the oversight by a European body.

'In an EU-US context this will mean that both sides will have to rely on each others' inspections of audit firms. Sending European inspectors to the US or American inspectors to Europe is a costly and complex exercise. There are probably better ways to spend taxpayers' money.'

He said initial join inspections might be inevitable in some cases.

'Our aim should be to establish a system based on mutual trust and mutual reliance… What is important for me is that there is an equality of treatment on both sides of the Atlantic. What's good for the goose is good for the gander, if I may put it that graphically,' he said.