EC meddling could hit UK companies

European opt-outs could leave UK companies stranded from the international
accounting standards system and facing higher capital costs, if the EU
frustrates International
Accounting Standards Board plans, a financial watchdog has warned.

In its Plan & Budget 2008/09 report the Financial Reporting Council
pinpointed a number of ‘major risks’ it faces in the future. One of them
included the scenario that the European Commission could ‘carve out’ certain
aspects of future standards set by the IASB.

‘The EU might adopt standards that prohibit UK companies from complying with
IFRS as published by the IASB, thus making their financial reports not
comparable with their peers and increase their cost of capital,’ the FRC report
said.

Two years ago, after a sustained outcry by financial institutions, the
commission carved out crucial rules from IAS39, resulting in two different rules
within Europe and incomparability among companies.