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International Accounting Standards Committee IASC - FEE Study on IAS

Under the proposed Regulation on the application of international accounting standards of 13 February which requires listed companies to apply IAS in their consolidated accounts from the financial year 2005 onwards, compliance with the Accounting Directives remains required. At present, there are incompatibilities between the Accounting Directives and IAS. The urgent need for modernisation of the Directives is acknowledged by all parties concerned. The question is how ! A crucial factor is time. There are various ways to modernise the Directives. FEE published today a Discussion Paper on the Modernisation of the Directives. The paper discusses both the strategic and technical issues that are at stake and gives the advantages and disadvantages of the various approaches for modernisation.

FEE President Goran Tidstrom states "It is crucial that listed companies can use IAS from 2003 onwards, since they have to produce comparative figures. Application of IAS should not be hampered by the Accounting Directives. Time is of the essence. The easiest way would be to transfer listed companies to a separate capital market regime. A second possibility favoured by FEE would be to introduce a high level version of Directives for companies applying IAS, including only issues that are not dealt with the IAS. It should be realised that time does not allow for a full modernisation of the Directives".

Click for Copy of the FEE Discussion Paper (114k, PDF).

Notes to Editors

1. To modernise the Accounting Directives, various alternative approaches are discussed

  • scoping out companies applying IAS from the Accounting Directives and transferring them to a capital market regime (rules and legislation concerning companies listed at a stock exchange)
  • a high level version of the Accounting Directives for companies applying IAS including only issues that are not dealt with in IAS
  • minimum changes required to remove present incompatibilities and to allow national GAAP to converge to IAS
  • full modernisation of the Accounting Directives.

In considering the merits of these alternative approaches on the grounds of effectiveness in eliminating incompatibilities between Directives and IAS likelihood of being able to be in place by 2003 for listed companies costs to European business maintaining comparability of financial information on EU companies.

FEE continues to hold the view that the preferred solution would be to exempt listed and other companies applying IAS from the Accounting Directives and to transfer them to a separate capital market regime. However, if such an approach to scope out companies applying IAS from the Directives, e.g. for legal reasons, were not possible, FEE's preferred way to modernise the Accounting Directives would be the introduction of a "high level" version of the existing Directives with only issues that are not dealt with in IAS. As a second step, a limited revision of the Directives could be envisaged with the aim of allowing national GAAP to converge to IAS. FEE would not be in favour at this stage of a fundamental review of the Accounting Directives, although this might be needed in the longer term, but not as a substitute for the other steps.

2. The Accounting Directives include the Fourth Directive of 1978 (78/660/EEC) on annual accounts and the Seventh Directive of 1983 (83/349/EEC) on consolidated accounts.

3. The Federation des Experts Comptables Europeens (FEE) is the representative organisation for the accountancy profession in Europe, currently grouping together the 38 leading institutes in 26 countries, including the 15 Member States, Cyprus, Czech Republic, Hungary, Iceland, Israel, Malta, Monaco, Norway, Romania, Slovenia and Switzerland. Between them these bodies have a combined membership of approximately 400.000 individuals of whom about 45% work in the public practice, providing a wide range of services to clients, whilst the other 55% work in various capacities in industry, commerce, government and education.

Further information can be obtained from the FEE Secretariat (rue de la Loi 83, 1040 Brussels - Tel. + 32 (2) 285 40 85, Fax: + 32 (2) 231 11 12).

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