FINANCIAL REPORTING: EXPERTS FIND IAS MORE PUZZLING THAN WORLD ACCORDING TO GAAP.
Despite trying to identify a solution last month, COREPER has resolved to pass the issue to a working group. However, the complexity of the issues mean that it is now expected that the subject will not be debated at the next Internal Market Council on May 30/31."There are lots of technical difficulties such as the appreciation of assets and the harmonisation of national accounting processes that are holding up COREPER and the Council of Ministers", said an EU diplomat. "The problems are that several countries are trying to protect their own national accounting systems and this is proving difficult to resolve."The initiative is part of the wider Financial Services Action Plan and follows on from the December 1995 and June 2000 Commission Communications on the future of financial reporting in Europe, which urged EU Member States to allow European companies operating on an international scale to prepare their accounts using the IAS system. Seven EU nations - Austria, Belgium, Germany, France, Finland, Italy and Luxembourg - have now made provisions allowing companies to use IAS, as well as the system used in the America, US GAAP (the Generally Accepted Accounting Principles).--Most EU companies still use national accounting standards based upon the EU Accounting Directives (4th and 7th Company Law Directives 78/660/EEC and 83/349/EEC), rather than IAS or US GAAP. The Commission had hoped that legislation on mutual recognition of accounting systems would be sufficient, but eventually acknowledged that full harmonisation would be necessary. The 4th and 7th Directives themselves will be updated in the course of 2001-2002, on the basis of proposals due out within the next few months.--
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|Article Type:||Brief Article|
|Date:||May 5, 2001|
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