'IFRS – No Pain, No Gain?'
19 Oct 2005
The European Union's internal markets Commissioner, Charlie McCreevy, enumerated the benefits of introducing IFRSs for listed companies in Europe in remarks made at the official opening of the new offices of FEE (the Federation of European Accountants) in Brussels.
A common accounting standard increases investor transparency and comparability. As users become more familiar and confident with IFRS, the cost of capital for companies using IFRS should fall. It should lead to more efficient capital allocation and greater cross-border investment, thereby promoting growth and employment in Europe. Furthermore, we are all aware of the challenges that globalisation and a rapidly-industrialising China are bringing. Now more than ever, we need to press on with the Lisbon agenda and increase the efficiency of the European economy. A common accounting standard based on IFRS, rather than a thicket of different national standards, is therefore not a luxury, but rather an absolute necessity. |
- Benefits of IFRSs to companies internally, including reduced capital costs, better management reporting, and improved internal control systems.
- Benefits to European companies listed in the United States, including eliminating the cost of preparing a reconciliation to US GAAP, and convergence of US GAAP and IFRSs.
- Benefits to European companies globally expected to result from convergence activities in other jurisdictions, including China, Japan, Canada, and India.