The EU Commission has recently launched its proposal for a Regulation on the application of IAS, including a requirement for EU listed companies to use IAS by 2005. Preparers, including SMEs, users and the accountancy profession, in close co-operation with the national standard setters, launch plans for the Accounting Technical Committee, the expert level of the endorsement mechanism as proposed by the EU Commission in its Proposal for a Regulation: European Financial Reporting Advisory Group – EFRAG. The aim is to have one single set of accounting standards for the European capital market that cannot only be used in the EU but world-wide: IAS.
Europe can only support IAS if it has sufficient input and influence in the development of IAS. It needs to be ensured that issues identified in Europe are fully understood and properly debated in the International Accounting Standards Board (IASB). Therefore it is time for the EU to co-ordinate its views and to share its resources so as to provide input to IASB at an early stage. The proactive contribution to the work of IASB would be the main function of EFRAG. Another function of EFRAG is technical assessment of IAS and SIC Interpretations («the actual endorsement as such» as referred to in the proposed Regulation).
FEE President, Gцran Tidstrцm, welcomes the proposed adoption of IAS within the EU but nevertheless believes that a European endorsement mechanism is important if Europe is to influence the shape of the international regime: «the main purpose of EFRAG will be to make sure that a European view is defined and fed into the IASB»s initiatives at the earliest possible stage. EFRAG will enable Europe to make contributions over time that will be comparable to the contributions made by the US.
The Chairman of the Accounting Harmonisation Working Group of UNICE, Jean den Hoed, stressed the importance of the involvement of the relevant European Organisations: «EFRAG should become the natural contact for the IASB in Europe and be an important player since some 7000 European listed companies will have to apply IAS by 2005, onwards. As it is expected that governments will introduce IAS for a wider range of enterprises in the following years, SMEs need also to be informed of this new process from the start».
On 13 February, the EU Commission presented a proposal for a Regulation that would require all EU companies listed on a regulated market, including banks and insurance companies, to prepare consolidated accounts in accordance with International Accounting Standards (IAS). This requirement would enter into force at the latest in 2005. EU member States would have the option to extend this requirement to unlisted companies and to the production of individual company accounts. The Regulation would help eliminate barriers to cross-border trading in securities by ensuring that company accounts throughout the EU are more transparent and can be more easily compared.