The EU supports, along with other key trading partners (e.g. China, Japan, South Korea, etc.), the principle of a common set of worldwide accounting standards for listed companies. Thus, the Prospectus and Transparency Directives require third country issuers to prepare financial reports in accordance with IFRS or any other standard which has been declared equivalent to IFRS.
This prolongation gives more time to countries which had committed to converge or replace their GAAPs to IFRS (e.g. India) and have made important progress towards that goal. It also enables the Commission to pursue discussions with other third countries in order to encourage the use of IFRS throughout the global financial markets. In 2007 and 2008, the Commission established a mechanism to determine the equivalence of GAAPs from third countries and adopted legal measures which identified as equivalent to IFRS the US GAAPs, the Japanese GAAPs, and accepted financial statements using the GAAPs of China, Canada, India and South Korea within the EU on a temporary basis, until 31 December, 2011. The GAAPs of China, Canada, and South Korea are declared equivalent and the transitional period is prolonged as regards Indian GAAPs until 31 December, 2014. The measures mean that foreign companies listed on EU markets will continue to be able to file their financial statements prepared in accordance with those GAAPs.
Press release
© European Commission
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