Europe to Impose International Accounting Standards by 2005
According to sources, Commission officials have been consulting with national governments and accountancy bodies for some time over amendments to the fourth and seventh accounting directives. The Commission has encouraged national governments to allow the use of IAS within their jurisdictions; France, Germany and Austria already do so. The Department of Trade and Industry's Company Law Review panel is considering allowing it under UK law.
The Commission appears to have firmed up its stance after international stock market regulators endorsed a core package of 30 IAS as a "passport" for companies seeking listings on foreign exchanges.
The committee of stockmarket regulators, (known as IOSCO) recognized there would be transitional difficulties. Where national standards produced material differences, IOSCO advised that reconciliations and interpretive disclosures would be needed.
The European Union does not have any direct input to the private-sector International Accounting Standards Committee. It is now formulating its definitive statement on accounting standards and is likely to propose an "endorsement" mechanism that will allow it to signal its approval or disapproval to the standard-setters.
With such a system in place, the Commission is likely to go ahead with the proposal for a 2005 implementation date. The "big bang" statement is expected within the next two weeks.