EU intepretive body not needed

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12 Dec 2005

Charlie McCreevy, the European Commissioner for Internal Market and Services, spoke last week on Recent Developments in the Internal Market for Financial Services and Financial Reporting before the Association of Corporate Treasurers in Belgium.

Here are two excerpts from his comments on financial reporting:

Consistent application of IFRS in the EU. While CESR, auditors, and preparers of financial statements all have responsibilities in this area, "what is absolutely clear is that we do not want any EU body, formal or informal, providing EU interpretations and guidance. Where interpretations need to be done, this must be the job of the responsible body of the IASB, namely IFRIC."

Equivalence between third country GAAP and IFRS. "Making IFRS work in the EU puts us in a position to be able to claim an even bigger prize: greater access of EU companies to global capital markets. This should include removal of the reconciliation requirement to US GAAP for companies which list in the US. The US SEC agreed to a Road-map in April 2003 with the aim of working towards this at the earliest in 2007 and at the latest in 2009. In the EU we are, of course, also looking into the use of third country GAAP in order to establish whether these might be considered equivalent with IFRS. For the moment, my view is that the best way to proceed is for the EU to defer an equivalence decision and prolong the status quo, rather than taking any decision now. This option would align the EU's equivalence agenda with the US Roadmap for dropping the reconciliation requirement for foreign issuers in the US. It would mean we could work in parallel towards common agreed objectives."

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