The ICAEW has warned the European Commission of the 'long term damage to the credibility and quality of financial reporting in Europe' if it goes ahead with its plans to partially endorse financial instruments standard IAS39.
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In a letter to internal market commissioner Frits Bolkestein, ICAEW chief executive Eric Anstee urged the EC to adopt the full, unabridged version of IAS39 in time for 1 January 2005. He argued that failure to do so will ‘make a mockery’ of the aim to have EU companies apply truly global standards.
He also questioned the legality of adopting an altered standard.
‘It is unclear whether the Commission has a sound legal basis for adopting a standard other than a complete standard issued or adopted by the IASB. Without clarification of the legal position, the Commission may be open to legal challenge by any party, which feels disadvantaged by being unable to follow IAS 39.’
‘If the Commission adopts a version of IAS 39 that prevents European companies from complying with the complete standard as issued by the IASB, thereby damaging the credibility of European financial reporting, there may well be adverse consequences for the cost of capital of European companies.’
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