Europe adopts regulation requiring IAS by 2005

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08 Jun 2002

The Council of the European Union has adopted an IAS Regulation requiring listed companies, including banks and insurance companies, to prepare their consolidated accounts in accordance with International Accounting Standards (IAS) from 2005 onwards.

Member States may defer application until 2007 for those companies that are listed both in the EU and elsewhere and that currently use US GAAP (or other GAAP) as their primary basis of accounting, as well as for companies that have only publicly traded debt securities. The goal of the Regulation is to eliminate barriers to cross-border trading in securities by ensuring that company accounts throughout the EU are reliable, transparent, and comparable. The Regulation has the force of law without requiring transposition into national legislation. However, "to ensure appropriate political oversight", the Regulation establishes a new EU mechanism to "assess IAS to give them legal endorsement" before they can be used in Europe. Member States have the option of extending the requirements of the Regulation to unlisted companies and to the production of individual accounts.

 

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