Standards & Guidance
EU and US take action on accounting convergence
The
European
Parliament has proposed a resolution that will force the
Commission to rethink its plans
to ratify the controversial international financial reporting standard 8 (IFRS
8).
Critics of IFRS 8 suggest the standard assumes a US view of governance by, for
instance, allowing executive management to decide the
parameters by which their own performance is reflected in the audited published
accounts.
The Parliament said it was concerned the Commission is
proposing to import into EU law an alien standard without having conducted any
impact assessment.
The resolution therefore calls on the Commission to
“urgently” carry out such an evaluation, and warns that if the Commission fails
to do so, Parliament will carry out its own assessment.
Meanwhile, US companies may be granted the option of filing their accounts solely in
line with international financial reporting standards (IFRS) under plans
proposed for discussion by the US Securities and
Exchange Commission (SEC).
Later in the year the regulator intends to release two discussion papers on
IFRS: one on the use of the international standards by foreign issuers in the
US; and another exploring whether US companies should be allowed the option of
reporting in IFRS rather than domestic standards.
Christopher Cox, SEC chairman, said these latest steps will keep the
regulator on course to eliminate reconciliation – which requires overseas
companies listed in the US to re-file parts of their IFRS accounts under US GAAP
rules - by 2009.
Links
European
Parliament
European Commission
US Securities and Exchange Commission
May 2007
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