The lofty goal of one world: one set of accounting standards remains just out of reach as three major players in the world economy grapple over some major sticking points.
The European Union is insisting that Japan use international accounting standards rather than Japan's generally accepted accounting principles (GAAP) if Japanese companies want to list in Europe in 2005, Dow Jones Newswires reported. Japan is resisting the move since it seems likely that the EU will end up compromising on some of the same rules it wants Japanese companies to follow.
The EU is in a dispute with the International Accounting Standards Board over the Board's proposed derivative accounting rules, Dow Jones reported, adding that the rules are critical to the Board's efforts to bring new accounting rules to Europe.
The dispute has made it on to the radar of the U.S. Securities and Exchange Commission, which says it won't take financial filings from European companies unless the EU requires them to follow the IASB's derivative rules, which closely mirror U.S. rules, Dow Jones reported.
The EU's goals include making it easier for European companies to list stocks in the U.S. and the EU is trying to keep European banks from using different standards to produce accounts, Dow Jones reported.
John Hitchins, a partner at PricewaterhouseCoopers, told Dow Jones that the current situation is "pretty serious." "If the European Union doesn't adopt international accounting standards with IAS 32 and IAS 39 [the standards that deal with derivatives], it will leave a big hole in the IAS framework. The EU itself would have to consider drafting alternative rules," he says. But, he adds, these may not be acceptable across Europe because of national differences. For instance, Germany has adopted IASB standards, but the French oppose the new derivative rules.