Fourth directive must 'keep pace with change'

The European Commission indicated last week it was considering amendments to its fourth company law directive, on banking and accountancy, to bring it closer to the emerging international consensus on accounting standards.

Karel Van Hulle, head of the European Commission’s financial information and accounting standards unit, told the audience at last week’s International Accounting Standards Conference in Brussels that the company law directives ‘must keep pace with change’.

He also said the commission was considering a principle called comitology to allow changes to the directives to be made by a majority rather than a unanimous vote.

While Van Hulle said the commission supported the development of international standards, the fourth directive was based on the historic cost principle and did not allow the recognition of unrealised profits which formed the basis of fair market valuation techniques prescribed by International Accounting Standards.

The commission appeared to be responding to concerns from auditors who were in danger of being caught between national and international standards and the European accountancy directives.