European Commission report on equivalence
Apr 23, 2008
The European Commission has prepared a Working Paper on non-EU countries in the process of converging their national GAAPs towards IFRSs and on the progress towards the elimination of reconciliation requirements that apply to EC issuers listed in these countries.
- Japan, United States, China, Canada, Korea: The report concludes that Japanese GAAP and United States GAAP both meet the criteria of equivalence to IFRSs. Chinese GAAP will continue to be accepted, but since it moved to IFRS equivalents for the first time in 2007, more information on its implementation is needed. The EC intends to review Chinese implementation in the future. The report also concludes that an exemption until 2011 should be granted to Canada and South Korea in view of their ongoing efforts to move to IFRSs in the near future. The Commission will soon present legislative proposals to reflect the foregoing conclusions.
- United States acceptance of IFRSs as adopted by the EU: For the few EU companies using the EU's IAS 39 carve-out, the US is requiring a reconciliation to IFRSs. The EC seeks removal of the US reconciliation requirement for all European issuers using IFRSs as adopted by the EU. "Efforts need to continue to resolve the issue of the carve-out of IAS 39. In this context the paper calls on the IASB to play a full role."
- Australia, Hong Kong, New Zealand, Singapore, South Africa, Israel: Australia, Hong Kong, New Zealand, Singapore, and South Africa are already applying IFRS equivalents. Israel has made IFRSs mandatory for all listed companies except banks and dual listed companies starting January 2008. In these cases the paper calls for an explicit and unreserved statement of such a compliance with IFRSs to be included in the audited financial statements.