The European Commission issued a report backing an alternative standard.
The moves are likely to bring to an end the most significant crisis in the International Accounting Standards Board’s recent history.
The office of Internal Market and Services Commissioner Charlie McCreevy gave a positive recommendation for IFRS 8 this week, in a report backing the standard to the influential EU parliamentary committee for Economic and Monetary Affairs.
Campaigners believe that such information is crucial in holding multi-nationals accountable for their activities, and oppose IASB proposals for a standard that gives huge freedom to executives to report as they wish.
The moves followed a crunch week in which the top six accountancy firms all lobbied MEPs to adopt the standard. In a letter to the committee chairwoman Pervenche Berès, Pierre Delsaux, a commission official, wrote that ‘the use of IFRS 8 will generally enhance the quality of segment information.’
‘IFRS 8 addresses the needs of financial statements’ users for geographical disclosures and would not reduce this information in practice. We have seen no evidence that IFRS 8 would create concerns from a corporate governance perspective, or require excessive reporting from smaller listed companies,’ Delsaux said.
The IASB declined to comment this week, but will be extremely relieved that the commission will not disrupt plans for the so-called management approach to reporting company segments.
The EU parliament had shown interests in critics of the standard but the EC will make a final decision.
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