European companies are pushing to be allowed to use a European Union variant
of international financial reporting standards when communicating with US
investors, in a row that some fear could see a proliferation of localised
versions of the rules.
A group of multi-nationals, including Royal Dutch Shell, L’Oreal and
Unilever, have written to the Securities and Exchange Commission making the
IFRS was introduced to increase comparability, so the new variation would run
counter to the spirit of the project.
The SEC is to permit companies in the US to file under IFRS rather than under
US GAAP, but the US version of the IFRS rules, essentially the original IASB
version, is different from that used in the EU.
It is thought that language differences will be a significant variant, with
different nuances in rules meaning different things to companies from different
countries in the EU.
The SEC is insisting on filing in English, at least.
‘It is perfectly understandable that the [SEC] staff’s understanding of IFRS
is based on the English language version, and that its future comments will be
based on this version.
‘Companies from non-English speaking countries, however, should not be
required to use the English language version, which would increase the risk of
error, and which would make it impracticable to publish the same financial
statements in the United States and in the home country,’ the letter from the
European Association of Listed
Companies (EALIC) said.
The letter suggested that translation discrepancies be dealt through the
comment process, and international dialogue.
The companies also suggested that European companies could choose to leave
the US market if they did not find the proposed rule favourable, which would
‘seriously hinder the convergence process’.
Improvements to cashflow statements are being targeted in a consultation launched by the Financial Reporting Council (FRC)
Dr Richard Willis provides a several thousand-year history lesson of the profession, from origin to modern-day
The Financial Reporting Council has issued guidance regarding the annual reporting of 1,200 large and smaller listed companies. The letter highlighted the key issues and improvements that can be made in the 2016 reporting season
Long-serving PwC director Fiona Westwood has moved to Smith & Williamson and stepped up to partner