03 June 2002

Commission published Accounting Directive

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The European Commission has presented a proposal for a Directive amending the existing the 4th and 7th Accounting Directives. The proposal brings existing EU rules into line with current best practice. It complements the International Accounting Standards (IAS) Regulation, which will be finally adopted by the Council in the next few days.

The amendments now proposed to the Accounting Directives would allow Member States which do not apply IAS to all companies to move towards similar, high quality financial reporting. They would allow appropriate accounting for special purpose vehicles, improve the disclosure of risks and uncertainties and increase the consistency of audit reports across the EU.

The proposed IAS Regulation will require all EU companies listed on a regulated market to prepare their consolidated accounts in accordance with endorsed IAS from 2005 onwards. Where endorsed IAS is not applied, the detailed provisions of the 4th and 7th Accounting Directives will continue to act as the basis of EU accounting requirements. These Directives may therefore continue to be applicable to up to 5 million companies in Europe.

The proposal would remove inconsistencies with International Accounting Standards (IAS). Notably, it makes it more difficult for a company to 'hide' liabilities by setting up artificial structures (so-called 'special purpose vehicles') which, in substance, they control but which, considering only the shareholdings, appear to be largely unrelated. This is an important step in the proper treatment of off-balance-sheet financing.

The proposed amendments also move towards a more harmonised presentation of statutory audit reports, by outlining the necessary content of such reports, which are a valuable assurance that accounts are reliable. The new requirements are consistent with those of International Standards on Auditing issued by the International Auditing and Assurance Standards Board.

Commission Press Release
Accounting Directive amending Council Directives 78/660/EEC, 83/349/EEC and 91/674/EEC on the annual and consolidated accounts of certain types of companies and insurance undertakings

© European Commission