FEE warns that EU standards "second best" without IAS 39

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05 Jun 2004

A report published by FEE, the Federation of European Accountants, warns that Europe's accounting standards would be regarded globally as inferior if some IFRSs (particularly IAS 39) are not endorsed for use in Europe.

"We emphasise the need for 'endorsed IFRS' to be the same as 'IFRS'", said FEE President David Devlin. "The endorsement process should not be used as a means to create European standards. Only global standards will meet the wider objectives of financial stability, efficiency and transparency and provide the benefits of increasing confidence in financial markets, reducing the cost of capital and facilitating global investments." The report identifies the following "serious implications" of not endorsing all IFRSs:

  • Extra disclosures to explain differences from IFRS, for reasons of transparency.
  • Companies would no longer be able to claim that their financial statements were prepared under IFRS, with related consequences for the audit report.
  • Related audit implications.
  • The risk of setting a precedent.
  • System changes implications of any unique European standards in any area, such as IAS 39.
  • The risk that some financial institutions, banks or insurance undertakings that apply or want to apply IAS 39 will be seriously disadvantaged.
  • Access to capital markets could be restricted or made more expensive.
  • Loss of opportunity to converge IFRS and US GAAP and possible impact on other elements of transatlantic dialogue.
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