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European Commission prolongs equivalence mechanism for third-country GAAPs

Apr 13, 2012

The European Commission (EC) has adopted two delegated regulations and one implementing decision to revise and update the EU’s IFRS Equivalence Mechanism. The series of documents are retroactively effective from 1 January 2012.

The EC states that the “prolongation gives more time to countries which had committed to converge or replace their local GAAP and have made important progress towards that goal. It also enables the Commission to pursue discussions with other third countries in order to encourage the use of IFRS throughout the global financial markets. In 2007 and 2008, the Commission established a mechanism to determine the equivalence of GAAPs from third countries and adopted legal measures which identified as equivalent to IFRS the US GAAP, the Japanese GAAP, and accepted financial statements using the GAAPs of China, Canada, India, and South Korea within the EU on a temporary basis, until 31 December 2011.”

These instruments declare Chinese, Canadian, and South Korean GAAP as equivalent to IFRS. The transitional period for Indian GAAP is extended until 31 December 2014.

Further information can be found on the European Commission's equivalence/convergence page.