International rules now hit audit

Under a European Union ruling all listed companies in Europe will have to comply with a single set of international accounting standards by 2005 at the latest. In order to harmonise the whole financial reporting process, the EU and global standard-setters are working towards achieving endorsement from Iosco, the global club of stock market regulators, of a single set of international rules on auditing.

The EC has not yet made any official pronouncements on the matter but Karel van Hulle, head of company law at the Commission, is expected to be pivotal in driving for such a ruling.

In the UK much noise has already been made about this move amid fears that by adopting the ‘low quality’ international standards, the level of auditing will drop. So, the newly-named ISSAB, the global auditing standard setting board, has been working to finalise revisions to its rules.

The UK’s respected Auditing Practices Board has been keeping a close eye on recent developments.

Ian Plaistowe, chairman of the APB since 1990 and board member of the ISSAB, told Accountancy Age: ‘There are some fundamental rewrites going on by the ISSAB. It’s another major area of debate.’ Plaistowe is of course making sure the UK voice is heard loud and clear.

Still, as with accounting standards, the UK is in a much better position than its European counterparts.

Jon Grant, technical director of the APB, said: ‘We’re relatively well-placed in the UK. I would say (international standards) are 80% the same as UK standards.’

Of the remaining 20%, Grant reckons that half the differences are ‘inconsequential’ while the other 10% represents ‘important differences’.

‘We’re looking to see how we can contribute to the standards before they are applied here,’ he added.

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