EU endorses international standards
Formal proposals insisting that all European Union listed companies adoptinternational accounting standards by the year 2005 are to be made by theEuropean Commission by the end of this year.
In a landmark paper issued by the Commission today, Brussels said it would be ‘recommending there be one set of accounting standards so that company accounts throughout the European Union are more transparent and can be more easily compared’.
It said that proposals would be made this year ‘which would require all EUcompanies listed on a regulated market to prepare consolidated accounts inaccordance with IASs,’ entering into force from 2005.
It added that member states would be given the option of extending thisrequirement to unlisted companies and individual accounts.
Although many leading players in the UK accounting profession support IASs, some warned of a ‘sting in the tail’ arising from a proposed screening mechanism which could reject IASs if they are ‘unacceptable’.
Deloitte & Touche chairman Martin Scicluna said: ‘I cannot believe that in the hands of bureaucrats such a power will be used as infrequently as they are claiming. This will become the death-knell for global accounting standards harmonisation.’
Launching the plans this week, EU internal market commissioner Frits Bolkestein said: ‘The costs of differences in financial reporting methods can be extremely onerous for investers and other stakeholders. Adoption of the proposals should result in the removal of the fragmentation in financial reporting that prevails in Europe today.’
He said that it would be a ‘step forward towards developing integrated, deep and liquid capital and financial services markets, to improve capital raising efficiency while preserving investor protection’.
Regarding enforcement, the communication says that there should be a ‘high-quality statutory audit, as well as strengthened coordination amongEuropean securities regulators.’
Accountancy Age at IFAC 2000, Edinburgh