European authorities recently passed a regulation requiring public companies to adopt International Accounting Standards (IAS) by 2005. Several European organizations were established and/or called upon to help ensure a smooth transition. The events have not gotten much of a reaction in the U.S., but PricewaterhouseCoopers (PwC) Chief Executive Officer (CEO) Samuel A. DiPiazza applauded the move and urged the United States to follow suit.
European Rules and Resources
The IAS Regulation adopted on June 7, 2002 by the Council of the European Union (EU) requires public companies to prepare their consolidated accounts in accordance with IAS from 2005 onwards. The full text of this regulation, along with news of other developments, can be downloaded from the EU's accounting site.
Political oversight will be provided by a newly-established Accounting Regulatory Committee chaired by the European Commission and composed of representatives of the member states. Technical advice will be supplied by EFRAG, a European Financial Reporting Advisory Group comprised of accounting experts from the private sector. EFRAG launched a new Web site on June 13, 2002 so interested observers could follow current developments and comment when appropriate.
PwC Calls for U.S. To Follow Suit
Speaking at the Munich Economic Summit on June 8, 2002, PwC CEO Samuel DiPiazza called on U.S. companies to move away from the current system of U.S. generally accepted accounting principles (U.S. GAAP) to a framework similar to IAS. In prepared remarks, Mr. DiPiazza said, "We support the EC plan for single capital market – an accounting and auditing strategy based on convergence around global standards (IAS and ISA). We urge other countries, not least the U.S., to do likewise. When Europe moves to IAS, it will be far more difficult for others to abstain." He was also widely quoted as saying, "The movement must be towards IAS. It may surprise you to hear this, but we believe that U.S. GAAP needs to change from a complex, debilitating system to something closer to an IAS framework."
Mr. DiPiazza's comments are especially noteworthy since he is based in New York and currently serves on the board of trustees of the Financial Accounting Foundation, the organization that oversees the U.S. GAAP-maker, the Financial Accounting Standards Board. Read the full text of his prepared remarks on PwC's Web site for chief financial officers, CFODirect.