Brussels, 05/06/2001 (Agence Europe) - The "Internal Market/Consumer" Council, gathered last Thursday in Brussels, formally adopted a Directive aiming to modernise the European accounting rules, that is to say bringing them into line with international accounting practices.
As we previously indicated, the Directive will replace the present rules, 20 years old, by authorising the application of the "fair value" accounting method (fair value is usually associated to the present value of a financial instrument on the market, as opposed to its historic cost). Thus, European companies will be able to prepare financial statements understood and accepted throughout the world. This new regulation means that derivative financial instruments such as options, swaps and futures, etc. will have to be assessed on their true value or that information on this true value will have to be provided. It also includes banks and other financial companies. The small companies will be dispensed from the obligation of providing information.
Welcoming the adoption of the Directive, Leif Pagrotsky, Swedish Trade Minister and acting President of the Council stated: It is important that, in the presence of an international capital market, European companies have the possibility of presenting their accounting in accordance with international accounting practices. It is also important to be able to visualise the holding, by the companies, of derivative financial instruments that are at risk.