In a landmark paper issued by the commission on Tuesday, Brussels said it would ‘recommend there be one set of accounting standards so company accounts throughout the European Union are more transparent and can be more easily compared.’
It said proposals would be made this year ‘which would require all EU companies listed on a regulated market to prepare consolidated accounts in accordance with IASs’, entering into force from 2005.
It added member states would be given the option of extending this requirement 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’ from a proposed screening mechanism which could reject IASs if they are ‘unacceptable’.
Deloitte & Touche chairman Martin Scicluna said: ‘I cannot believe 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 investors 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 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 among European securities regulators.’
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