Update on corporate governance and accounting in EU

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02 Oct 2006

Charlie McCreevy, the European Commissioner for Internal Market and Services, spoke about (PDF 73k) at the EU Business Leader Forum of the Association of Chartered Certified Accountants of Ireland in Dublin on 29 September 2006. An excerpt: I believe that we are standing on the threshold of a new era.

In accounting, for listed companies, the beginning of 2005 saw the introduction of the IAS Regulation and its requirement that around 8000 European listed companies have to prepare their consolidated financial statements using IFRS. Initial studies show that the implementation of IFRS has generally been successful. I am aware that accountants and auditors have done extensive work in order to achieve these results. At the same time, more work needs to be done on consistent application of the standards across Europe. Several parties have a role to play in this area. CESR, the Committee of European Securities Regulators, is playing a leading role: it has created several working groups in order to coordinate enforcement decisions in different jurisdictions. In the interest of transparency, there will also be a public database of decisions taken. Accountants and Auditors can help to improve consistent application, by improved communication among themselves. Commissioner McCreevy also addressed the IASB's project to develop an IFRS for Small and Medium-sized Entities (SMEs). An excerpt from his comments:

I have repeatedly stated that accounting for SMEs must be simplified and that the level of accounting complexity should be aligned with the nature of the activities of these companies. We have to identify SME's real needs and those of their financiers and use them as the basis for deciding on their future accounting requirements.

I am aware that this is a politically sensitive issue - so there will be extensive consultation with all stakeholders. We will listen very carefully to the concerns of SMEs before taking any decision.

As you know, the IASB intends to publish an exposure draft on accounting standards for SMEs. There will be a period of consultation afterwards. I have made it clear already that only simple, easy-to-apply standards will be acceptable to us. Nobody should assume that the standards will be automatically transposed into European law.

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