DOC: FR
EN
DE
IP/02/827
Brussels, 7th June 2002
Agreement on International Accounting Standards will help
investors and boost business in EU
The European Commission has welcomed the
Council's adoption, in a single reading, of the
Regulation requiring listed companies, including banks and insurance
companies, to prepare their consolidated accounts in accordance with
International Accounting Standards (IAS) from 2005 onwards (see
IP/01/200
and
MEMO/01/40).
The Regulation will help eliminate barriers to cross-border trading
in securities by ensuring that company accounts throughout the EU
are more reliable and transparent and that they can be more easily
compared. This will in turn increase market efficiency and reduce
the cost of raising capital for companies, ultimately improving
competitiveness and helping boost growth. The IAS Regulation was
proposed by the Commission in February 2001. It is a key measure in
the Financial Services Action Plan, on which significant progress
has been made in the last few weeks (see
IP/02/796).
Unlike Directives, EU Regulations have the force of law without
requiring transposition into national legislation. Member States
have the option of extending the requirements of this Regulation to
unlisted companies and to the production of individual accounts.
Although the Commission put forward the IAS proposal long before the
Enron affair, this is one of a series of measures which will help to
protect the EU from such problems others include the
Commission's recent Recommendation on Auditor
Independence (see
IP/02/723)
and its proposal to amend the Accounting Directives (see
IP/02/799).
Internal Market Commissioner Frits Bolkestein said: "I am
delighted that the IAS Regulation has been adopted in a single
reading and am grateful for the positive attitude of both the
Parliament and the Council. I believe IAS are the best standards
that exist. Applying them throughout the EU will put an end to the
current Tower of Babel in financial reporting. It will help protect
us against malpractice. It will mean investors and other
stakeholders will be able to compare like with like. It will help
European firms to compete on equal terms when raising capital on
world markets. What is more, during my recent visit to the US, I saw
hopeful signs that the US will now work with us towards full
convergence of our accounting standards."
To ensure appropriate political oversight, the Regulation
establishes a new EU mechanism to assess IAS adopted by the
International Accounting Standards Board (IASB), the international
accounting standard-setting organisation based in London, to give
them legal endorsement for use within the EU. The Accounting
Regulatory Committee chaired by the Commission and composed of
representatives of the Member States, will decide whether to endorse
IAS on the basis of Commission proposals.
In its task, the Commission will be helped by EFRAG, the European
Financial Reporting Advisory Group; a group composed of accounting
experts from the private sector in several Member States.
EFRAG provides technical expertise concerning the use of IAS
within the European legal environment and participates actively in
the international accounting standard setting process. The
Commission invites all parties interested in financial reporting to
contribute actively to the work of EFRAG. The Commission recently
proposed amendments to the Accounting Directives which would
complement the IAS Regulation by allowing Member States which do not
apply IAS to all companies to move towards similar, high quality
financial reporting (see IP/02/799).