01 December 2005

Speech McCreevy: EC Strategy on Financial Reporting

On the occasion of the European Federation of Accountants' (FEE) Seminar on International Financial Reporting Standards (IFRS) in Brussels, Commissioner McCreevy reviewed the experience, how IFRS are shaping up and to clarify what consistent interpretation means in practice.

As 2005 is the first year of mandatory universal application of IFRS in Europe the Commissioner expects some “teething problems in its application or interpretation” that had to be addressed effectively.

“We also need some broader arrangements to facilitate consistent application at company level” the Commissioner said and backed the idea for a temporary, informal Roundtable involving representatives of the relevant stakeholders such as IASB, CESR, FEE, UNICE, audit firms, National Standard Setters and preparers. However, such a Roundtable “will not be making any interpretations” as this is the task of IFRIC.

With regard to the equivalence between third country GAAP and IFRS, the Commission intends to address the issues arising under the Prospectus and the Transparency Directives before 1 January 2007.

“The best way to proceed may be for the EU to defer an equivalence decision and prolong the status quo, rather than taking any decision now” McCreevy said.

The Commissioner also calls for a a clear definition on the convergence of existing accounting frameworks. “We are not seeking to establish an absolute level of convergence”, he said. “Convergence is a tool, not an end in itself” he continued. “The main objective is to try and narrow the differences between the existing standards, not to make accounts even more indigestible with a whole set of new standards!”

Full speech

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