The main question in the medium term will be how to ensure consistent application of IFRS within Europe. This is crucial, to have a uniform set of standards and not effectively 25 national standards in place. It is also crucial to the objective of removal of the US GAAP reconciliation. A number of proposals are being considered, including one for a 'European Forum' consisting of interested parties, regulators, standard setters, preparers, and auditors in their peer groups. The forum would be tasked with promoting consistent application.

But we do not want to add layers of interpreting bodies. International Accounting Standards are principles-based and should remain so. I see the chief advantage of a possible European Forum in identifying and analysing issues, acting as a filter and thus allowing the International Financial Reporting Interpretation Committee to concentrate on the key issues requiring their attention.

The European Commission has always been a strong advocate of global standards – not just for accounting but also for auditing. While IFRS is the basis for a true global standard we must recognise the role US GAAP plays in the largest capital market in the world, i.e. the US. We do not necessarily need to apply exactly the same accounting standards, but differences should be narrowed down to such an extent that we can at least recognise each other's standards as equivalent. The world is moving towards IFRS – so this convergence issue is a key nut to crack.

My belief, and one of IFAC's founding principles, is that auditing and accounting standards worldwide need to be converged. Why? First, globalisation demands high-quality standards that can be applied from Madrid to Manila, from New York to Nairobi. Everyone should be on a level playing field.

Second, global standards will result in increased transparency and accountability. I also believe that developing countries that adopt international standards will see increased outside investment in their economies, by institutional and retail investors who are familiar with, and confident in, the standards, regardless of geography.

The fact is that we call US GAAP is comprised of over 2000 individual pronouncements issued by various bodies and organizations in a variety of forms. FASB Statements, Interpretations, Technical Bulletins, Staff Q&As;, APB Opinions and Interpretations, AcSEC Statements of Position, AICPA Audit & Accounting Guides and Technical Practice Aides, SEC Accounting Series Releases, Staff Accounting Bulletins, letters and speeches, EITF consensuses and D topics, and so on and so forth. And because the various standards, rules, and regulations can sometimes conflict, it needs to be organised into a GAAP hierarchy, you know, levels A, B, C, D.

• Pensions: The staff recommends the accounting guidance for defined-benefit pension plans and other post-retirement benefit plans be reconsidered. The trusts that administer these plans are currently exempt from consolidation by the issuers that sponsor them, effectively resulting in the netting of assets and liabilities in the balance sheet. In addition, issuers have the option to delay recognition of certain gains and losses related to the retirement obligations and the assets used to fund these obligations.
• Leases: The staff recommends that the accounting guidance for leases be reconsidered. The current accounting for leases takes an 'all or nothing' approach to recognizing leases on the balance sheet. This results in a clustering of lease arrangements such that their terms approach, but do not cross, the 'bright lines' in the accounting guidance that would require a liability to be recognized. As a consequence, arrangements with similar economic outcomes are accounted for very differently.
• Financial instruments: The staff recommends the continued exploration of the feasibility of reporting all financial instruments at fair value.
• Consolidation: The staff recommends that the Financial Accounting Standards Board continue its work on the accounting guidance that determines whether an issuer would consolidate other entities – including SPEs – in which the issuer has an ownership or other interest.
• Disclosures: The staff believes that, in general, certain disclosures in the filings of issuers could be better organized and integrated.

• Approval of March minutes and introductory remarks
• Joint meeting with IASB
  • Consideration of specific topics on IASB's agenda and work programme
  • Convergence
  • Conceptual Framework
  • Performance Reporting
• Approval of the Constitution Review Report

• Is switching to IFRSs a big adjustment for European listed companies?
• What are the big changes in the reported profits of European listed companies as a result of changing to IFRSs?
• In your opinion, what are the principal fears of the European companies concerning IFRSs? Which IFRSs are the most troublesome?
• Are European companies finding it difficult to apply IAS 39?
• What is the IASB's project on standards for small and medium-sized entities all about? Why are IASB SME standards needed?
• What will be the subjects addressed in the next group of IASB standards?

27-28 June 2005, London Monday 27 June 2005

• IASB Chairman's Update – Current Work
• Convergence – Progress to Date and the Way Forward
  • Bringing together IFRSs and US GAAP with the aim of eliminating the need for the 20F reconciliation by non-US SEC registrants
  • Bringing together IFRSs and Japanese GAAP
  • Wider implications of convergence
• IASB Agenda Priorities
• Performance Reporting Progress to date and future direction
• IFRIC Technical Matters
  • Emission Rights
  • Service Concessions
• Revenue Recognition

• IFRIC
  • Interpretations Worldwide
  • IFRIC Review of Operations
• Constitution – report on progress and impact on SAC
• Open Forum
• Possible Recognition and Measurement Modifications for SMEs – Progress since the February 2005 SAC meeting; responses to the Staff Questionnaire on Possible Recognition and Measurement Modifications for SMEs and discussion by the SAC; project plan.