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05 July 2005

CESR technical advice on equivalence of third country GAAP and IFRS





CESR publishes its final technical advice on equivalence between Canadian, Japanese and US General Accepted Accounting Practices (GAAP) and International Financial Reporting Standards (IFRS). CESR’s final advice has clarifies how companies reporting under GAAP are expected to provide additional information. The concepts of materiality and relevance have also been further explained. Companies reporting under GAAP are not expected to do a complete reconciliation of their financial statement into IFRS, but are expected to apply remedies in relation to the list of significant differences provided in the advice.

  • Companies which have subsidiaries such as Qualifying Special Purpose Entities (QSPEs) which are not consolidated for third country GAAP purposes, but are required to be consolidated for the purposes of IFRS, report a pro-forma balance sheet and profit and loss account on their local GAAP basis, but including the unconsolidated subsidiaries.
  • Companies reporting under Japanese GAAP which have either accounted for mergers by the pooling of interest method and/or have consolidated subsidiaries on the basis of GAAPs which are not consistent with either IFRS or any of the third country GAAPs, report a pro-forma balance sheet and profit and loss account on the basis of IFRS covering business combinations and consistent accounting policies, respectively.
  • Japanese and US third country issuers adopt accounting policies for the expensing of stock options on a basis equivalent to IFRS, for implementation on or before 1 January 2007.
  • In respect of certain specified IFRS and if applicable, in addition to the above mentioned remedies, there should be additional disclosures of sometimes a descriptive nature and sometimes a quantitative nature.

    As requested by the Commission, CESR included a description of the enforcement mechanisms which are in place in each country.

    Press release
    Technical advice
    Feedback Statement


    © CESR - Committee of European Securities Regulators


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