04 June 2004

FEE position paper on global standards

FEE published a position paper calling on all parties to come to ‘reasonable solutions’ in order to have a global standard on financial instruments available for endorsement of accounting standards for financial instruments in 2004. FEE emphasised that the IFRS endorsement process should not be used as a means to create European standards.

FEE’s position paper on global standards includes:

A strong commitment to high quality, global, principle-based neutral financial reporting standards;

High quality financial reporting necessarily involves judgement and integrity in applying principle-based standards;

Each of the players in the financial reporting chain must assume its responsibilities and behave in an ethical manner;

Convergence must reflect seeking best principle-based solutions and should demonstrate fully that experience from across the globe is utilised;

If standards published by IASB take a long time to be endorsed, it creates major uncertainties for preparers who have committed themselves to have IFRS in place by 2005 as well as for users and auditors.

The Federation is concerned about serious implications if non-endorsement results in a European standard in one or more areas. These include:

Extra disclosures to explain differences from IFRS, for reasons of transparency;

Companies would no longer be able to claim that their financial statements were prepared under IFRS, with related consequences for the audit report;

Related audit implications;

The risk of setting a precedent;

System changes implications of any unique European standards in any area, such as IAS 39;

The risk that some financial institutions, banks or insurance undertakings that apply or want to apply IAS 39 will be seriously disadvantaged;

Access to capital markets could be restricted or made more expensive; and

Loss of opportunity to converge IFRS and US GAAP and possible impact on other elements of transatlantic dialogue.

Press release
Position paper

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