These comments came in response to Committee of European Securities Regulators consultation paper, Proposed Statement of Principles of Enforcement of Accounting Standards in Europe.
It also called for a single national body that would have ‘ultimate responsibility’ for the effectiveness of the enforcement regime when international accounting standards come into force across Europe in 2005, and by which all listed companies must abide.
UK accounting standards are based on principles, while those in the US are based on rules. Many amongst the profession have blamed the Enron and WorldCom disasters that happened across the pond over the last 18 months on the enforcement of such inflexible rules.
Robert Hodgkinson, ICAEW director of technical strategy, said: ‘It is vital that an effective system of enforcement is in place by 2005 to counter the risk that inappropriate accounting may undermine investor confidence in Europe following the implementation of International Accounting Standards.
‘Companies and other capital market participants should be confident that non-compliance is likely to be detected. However, the proposed co-ordination mechanism should be flexible enough to embrace all sectors and entities that use IAS, not only listed companies.’
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