Brussels, 28/11/2007 (Agence Europe) - “Now it will be Europe's turn to accept accounts in US GAAP” (American accounting principles) and “this decision will have to be taken next year”, declared Charlie McCreevy, the European commissioner for the internal market, speaking at the annual conference of the European Federation of Accountants (EFA). “And it is certainly my intention to propose that no reconciliation to IFRS (International Financial Reporting Standards) will be needed” for American companies listed on European stock exchanges and which publish their accounts according to US GAAP norms, he added. This announcement, which the commissioner considers “the only sensible way forward”, comes following the announcement in mid-November by the American Securities and Exchange Commission (SEC) that it would suppress the obligation for reconciliation with US GAAP standards for foreign enterprises listed on US exchanges and using the IFRS standards (see EUROPE 9545).
Mr McCreevy urged the International Accounting Standards Board (IASB) to present without delay a proposal which would allow the full adoption of the standard IAS 39 concerning accounting and assessing financial instruments. “The IASB say they have a solution for the carve-out for the IAS 39. I would urge them to come forward with it”, he said, adding that to his knowledge “only one single EU company listed in the US” was concerned by this incomplete adoption.
On transatlantic cooperation on audits, Mark Olson, President of the American Public Company Accounting Oversight Board (PCAOB), presented the PCAOB's work aiming to achieve recognition (“full reliance”) of inspections carried out by the national control bodies in third countries on American companies listed there, and for which the main auditor remains the PCAOB. He indicated that the body he heads is due to adopt “a political declaration” at the beginning of December on the five principles which could lead to such reliance. The criteria are as follows: the adequate and integral character of the audit system, the independence of the system from the profession, its financial independence, transparency and the results obtained over time. Bilateral agreements will then be drawn up between the PCAOB and the bodies from third countries with a view to erecting further milestones towards recognition by the US authorities of audits carried out outside the USA. On the European side, directive 2006/43/EC statuary audit of annual and consolidated accounts authorises the Commission to recognise the equivalence of audit systems used in third countries (see EUROPE 9468). “While I think that joint inspections might be inevitable in some cases, especially in the early days, our aim should be to establish a system based on mutual trust and mutual reliance which avoids unnecessary duplication and the extraterritorial application of each others' standards”, said Mr McCreevy, who is keen to reduce the cost and complexity of audits carried out on the other side of the Atlantic. In March, the Commission and PCAOB decided to produce a roadmap in order to arrive at mutual recognition of audit control standards (see EUROPE 9382). (M.B.)