Strasbourg, 15/11/2007 (Agence Europe) - On Wednesday 14 November 2007, the European Parliament adopted three documents on international accounting standards. The first was a report by Manuel Medina Ortega (PES, Spain) on draft legislation to amend Regulation 1606/2002/EC on the application of international accounting standards, incorporating into EU law the 2006 inter-institutional comitology agreement giving the EP greater involvement in the examination of implementation measures that the Commission may decide to adopt to implement the regulation. The MEPs back the suggestion of adjusting comitology rules to match the new regulatory procedure with scrutiny. Acting against the European Commission, they scrapped the emergency nature of some changes in accounting standards in particular circumstances. During the plenary debate on Monday, Medina Ortega said he had reached the conclusion that there was no need for the emergency procedure requested by the Commission.
The European Parliament passed a resolution on: 1) amending Regulation 809/2004/EC on accounting rules covering the details of past financial information included in company information; and 2) the draft decision on the use of financial information by companies established outside the EU but quoted on EU stock exchanges. The EP took note of progress by the Commission on scrapping reconciliation requirements for EU companies quoted on stock exchanges outside the EU, and backed measures to ensure mutual recognition in 2009 of US GAAP accounting rules and EU rules based on International Financial Reporting Standards (IFRS) (see EUROPE 9541 and 9467). The MEPs say equivalence between IFRS and the standards applying outside the EU can only be possible if it allows investors to take similar decisions, and if financial information about a listed company is based on either IFRS or the standards applying outside the EU in the country in question. The EP welcomes the European Commission's decision to ask the Committee of European Securities Regulators (CESR) to provide technical advice on a mechanism for measuring the equivalence of accounting principles in a third country and the appropriate criteria for mutual recognition of accounting standards. The MEPs believe, however, that an over-hasty approach should not be used to ensure convergence of accounting standards and one should rather proceed via the signing of a framework agreement with the International Accounting Standards Board (IASB) which draws up and interprets the IFRS.
IFRS 8. Accepting without change a proposal from a parliamentary committee (see EUROPE 9539), the EP has agreed to the European Commission's proposal to approve IFRS 8 on sector-specific information incorporating the new standard used in the US. It points out that convergence of accounting standards between the EU and 'third countries' (countries outside the EU) is not a one-way process whereby one party would simply copy the financial information standards of the other party. The EP also expresses reservations on the Commission's research whereby application of IFRS 8 would not restrict the publication of geographical information by listed companies. The EP says it is vital for company managers to continue to provide sufficient information to allow users to assess risks and drivers for business both geographically and, where appropriate, country by country and business sectors. MEPs are concerned that listed companies would find it easier to hide unsavoury investment in places like Burma/Myanmar, for example. EU Internal Market Commissioner Charlie McCreevy said during the plenary debate that this could not be resolved via financial information standards on sector-based information but rather through changes in corporate liability issues. The Commission has been asked to publish a report on application of IFRS 8 by the end of 2011 at the latest. (M.B.)