The commission’s move to require European companies to use a single set of standards by 2005 gave a boost to supporters of a unified global accounting code.
But, the commission incorporated a ‘get-out’ clause allowing domestic regulators the power to demand additional disclosure if necessary. Many experts view the extra oversight power as undermining the harmonisation process and an indication that the US will follow suit.
Graham Ward, the institute’s president, said: ‘We strongly support the increasing use of international accounting standards, which is essential to the development of European capital markets. The proposed endorsement mechanism offers a way of providing legal backing to the standards within Europe and we look forward to making a constructive contribution to its operation. In developing the mechanism, it will be important to take account of the needs to provide timely input and be sufficiently representative.’
The statement identifies a number of key issues:
- It is important to establish the legitimacy of international accounting standards for use by listed companies within Europe.
- The IASC has a major role to play in ensuring that there is adequate consultation, both in Europe and elsewhere, when international accounting standards are developed.
- The endorsement mechanism should provide input to the development of international accounting standards at an early stage.
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