A group of lawmakers in Brussels has added its weight to concerns about widely used accounting standards in the wake of the financial crisis. Five MEPs have called for a review of the compatibility of IFRSs – which are used in the EU and many other countries – with European company law.
The way in which banks set aside money against losses on soured loans has been one of the most controversial issues for IFRS. The gap between loan losses reported under IFRS and those generated by a more conservative approach was highlighted last month when UK regulators said the nation’s biggest banks were undercapitalised to the tune of £27 billion at the end of 2012.
Syed Kamall, a UK Conservative MEP who backed the amendment, said: "The fundamental question is, are we just pursuing standards for the sake of standards but losing some important concepts along the way, such as prudence and 'true and fair'?"
Another amendment, put forward by four MEPs including Mr Kamall, would attach conditions to €32 million the European Commission is set to give the IASB’s parent body for the 2014 to 2020 period.
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