EU is developing an 'accounting proposal'

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15 Oct 2008

On 14 October 2008, José Manuel Durão Barroso, President of the European Commission, spoke at a press conference in advance of the two-day meeting of the European Council (heads of state of the 27 EU member states) that will be held on 15-16 October 2008. His remarks focused on the EU's response to the global financial crisis.

He noted, among other things, that today the Accounting Regulatory Committee will be considering a procedure for 'modifying accounting rules'. Click to Download Mr Barroso's Remarks (PDF 74k). The nature of the procedure or modifications is not indicated, but several press reports refer to possible relaxation of the fair value measurement rules for financial instruments. An excerpt:

We have now reached a comprehensive agreement and a detailed programme for the Euro area and the EU as a whole. A programme to restore liquidity. A programme to recapitalise banks and to protect savers and taxpayers. A programme to lay the foundations of recovery and future sustainability....

We have accelerated the procedure for modifying accounting rules. This will prevent healthy assets being undervalued. It will ensure EU companies are not at a competitive disadvantage with companies based in other jurisdictions. The Accounting Regulatory Committee will approve our proposal tomorrow, on Wednesday.

Also on 14 October 2008 (yesterday), the European Commission published FAQs on Europe's Response to the Financial Crisis (PDF 98k). The FAQ states:

The Commission has already launched fast-track procedures to adjust accounting rules in order to be sure that assets are not undervalued, confidence is not unnecessarily undermined and EU financial institutions not disadvantaged vis-à-vis their international competitors. Provided Member States and the European Parliament approve these changes quickly, this will allow the rules to be applied for the third quarter, from 1 July 2008.

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