FEE Discussion Paper on IAS

01 April 2001



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FEE believes that the ultimate aim of the modernisation process should be having the same financial reporting rules for individual and consolidated accounts. European Directives should not form an obstacle to use IAS. The priority of modernisation of the Accounting Directives is to reach full comparability and harmonisation of financial statements of at least listed companies across Europe and around the world and to avoid extra work and cost burdens for European companies. This approach is based on the assumption that IAS will be accepted worldwide for listing purposes. However, in this context the different roles of individual financial statements under the Directives
  • to provide information useful for economic decisions in capital markets, and
  • as a legal document affecting creditor protection, capital maintenance (restrictions on dividends) and (in some countries) as the basis of taxation
    have to be recognised being at the heart of some of the problems raised by the modernisation of the Accounting Directives.

    To modernise the Accounting Directives various alternative approaches are discussed:

  • scoping out companies applying IAS from the Accounting Directives and transferring them to a capital market regime
  • a high level version of the Accounting Directives for companies applying IAS including only issues that are not dealt with in IAS
  • minimum changes required to remove present incompatibilities and to allow national GAAP to converge to IAS
  • full modernisation of the Accounting Directives.

    In considering the merits of these alternative approaches on the grounds of

  • effectiveness in eliminating incompatibilities between Directives and IAS
  • likelihood of being able to be in place by 2003 for listed companies
  • costs to European business
  • maintaining comparability of financial information on EU companies.

    FEE continues to hold the view that the preferred solution would be to exempt listed and other companies applying IAS from the Accounting Directives and to transfer them to a separate capital market regime.

    See full Discussion Paper

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