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EU Commissioner urges US recognition of IFRSs

  • European Union (old) Image

05 Apr 2005

In a speech in Madrid on Competitiveness and Growth in the EU on 1 April 2005, Charlie McCreevy, the European Commissioner for Internal Market and Services, urged US recognition of IFRS financial statements submitted to the SEC without the need for reconciliation to US GAAP.

He noted that with respect to auditing standards "the US authorities have broadly accepted the equivalence of the approach of EU Member States' audit requirements." He said he would raise the issue of mutual recognition of accounting standards with the SEC during a trip to Washington later this time, including insistence on agreement on a framework and a timetable. Click to (PDF 76k). Here is an excerpt:

Since the beginning of this year, two major sets of standards are being applied globally: US GAAP and International Financial Reporting Standards, which are being applied by listed European companies since the beginning of this year. We have to find a way to free businesses which are active on both sides of the Atlantic from the costly requirement to publish their accounts according to both sets of rules and then having to square them up.

Up to now, US companies listed in Europe were able to publish their accounts in US GAAP. Under our new Prospectus and Transparency Directives, we must come to a decision about the equivalence of US GAAP to allow them to continue to publish their accounts in US GAAP. The Commission will base its decision on a technical report by the Committee of European Securities Regulators due in the summer.

But this is not a one-way street – it is only reasonable for European companies to expect that US regulators will make similar efforts to judge the equivalence of our international standards with US GAAP, and once this is done, to release companies from the costly burdens of converting standards. We intend to work closely with the SEC and standard setters to find a mutually acceptable road map through this problem.

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