Brussels, 11/12/2008 (Agence Europe) - 'In the next few days, the Commission will adopt two decisions which determine that the GAAPs of US, Japan, China, Canada, South Korea and India are found to be equivalent to IFRS as adopted by the European Union,' explained EU Internal Market Commissioner Charlie McCreevy in Brussels on Tuesday 9 December 2008 at a conference on auditing organised by the Federation of European Accountants (FEE) (see EUROPE 9786). He urged the International Accounting Standards Board (IASB), the private body responsible for drawing up IFRS, to work on the three further problems identified by the European Commission at the end of October 2008, when EU accounting rules were changed in the middle of the financial crisis to change use of 'fair value' for illiquid assets (see EUROPE 9763). The problems identified include insurance questions and innovative structured financial products and derivatives. McCreevy said he hoped technical solutions would be found in time for the publication of annual accounts.
On auditing, the Commissioner said it was planning to hold a consultation exercise in the first half of next year on the option of making International Standards of Auditing (ISA) compulsory in the EU. He said two studies were already under way that should be completed early next year - a cost-benefit analysis of introducing ISA in the EU and research to identify the potential differences between ISA and the auditing standards in force in the United States. On cooperation with oversight bodies outside the EU (see EUROPE 9717), he said 'joint inspections between oversight bodies might be unavailable in certain cases but they should remain an exception. And they have to be part of a confidence-building exercise among regulators. Joint inspections should lead quickly to full reliance and to home country oversight.' McCreevy added: 'I intend to present a proposal on the adequacy of third country oversight bodies. It will also deal with audit working papers and inspection reports.' At a dinner at the end of the conference later that day, Charlie McCreevy said that the question was becoming so complicated that it ran the risk of raising issues about major gaps in the future audit oversight system. Industry has received the message loud and clear. Jacques Potdevin, the FEE president, said 'There is a clear need for a comprehensive regulatory framework and for more transparency. I say comprehensive because I believe that each loophole, each exemption, may be the source of a systemic risk. However, regulation must remain appropriate and proportional, as overregulation is equally counterproductive.' (M.B. trans fl)