EU approves amended accounting directives
08 May 2003
The European Union's Council of Ministers has approved the amended EU accounting directives (the 4th and 7th Company Law Directives), bringing them into law.
The directives had been approved by the European Parliament in January 2003. The revised directives complement the IAS Regulation, adopted in June 2002, that requires all listed EU companies to use IFRS from 2005 onwards and allows member states to extend that requirement to all companies. The amended directives allow member states that choose not to apply IFRS to unlisted companies to move towards similar, high quality financial reporting, and could therefore affect up to five million companies. Among the changes:
- All inconsistencies of the old directives and IFRS have been removed.
- Companies' ability to keep liabilities off the balance sheet by using special purpose vehicles is restricted.
- Disclosures about risks and uncertainties are required in annual reports.
- Audit reports are made more consistent across the EU.
