PracticeAuditSplit in Europe over IASs

Split in Europe over IASs

A political spat has broken out between the European Commission and the European Parliament over Brussels' proposals to impose International Accounting Standards on all listed companies in the European Union.

MEPs are seeking to ease the burden that IASs would impose on smaller businesses.

In particular, the European Parliament’s legal affairs committee has voted to amend the proposed regulation by removing the commission’s chosen requirement that companies preparing to be listed on regulated markets should also prepare consolidated IAS accounts.

This, said the committee, ‘might lead to disproportionate financial reporting requirements for small businesses‘.

Also, the MEP’s passed another amendment that would allow member states to exempt (until 2007) EU-listed companies from IAS standards, where they also publicly trade on a regulated third country market.

In this case they would apply different internationally accepted accounting standards – the temporary exemption would also apply to companies which have only publicly traded debt securities.

These changes will have to be approved by the full parliament to come into force.

Although they could be overturned by the EU Council of Ministers the proposal is being dealt with under the co-decision procedure, so MEPs can insist on their amendments.

The commission did however support the general aim of forcing listed EU companies to apply IASs from 2005 onwards.

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