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Europe is undergoing a profound and unprecedented crisis involving financial markets, public finance and the economy. The crisis has had drastic social impacts, in turn destabilising Member States’ political systems and raising probing questions on the European Monetary Union and the governance of the EU, perhaps even the European project itself. Public confidence in markets, banks, business, media and regulators has been negatively affected.
In particular the sovereign debt crisis dictates the financial agenda and severely impacts capital markets. These are times to act with integrity and responsibility: all stakeholders have a responsibility to unite and act with due consideration for the public interest. The times that sovereign debt was regarded as risk-free are over. As the end of the year approaches, when many entities in the private and the public sector will have to prepare financial reports, FEE believes that the European accountancy profession needs to play a key role by contributing to the transparency and reliability of financial and non-financial information, therefore enabling better decision-making and contributing to restoring public and financial market confidence.
Therefore, FEE emphasises challenges facing both private and public sector management, accountants preparing financial statements, as well as auditors, in these difficult economic circumstances.
It is critical that the information provided is fair and transparent to allow users to apply their own judgement and ultimately make sound and unbiased economic decisions. Professional accountants are frequently involved in the preparation and interpretation of accounting information to support important business decisions. Sound decisions are the cornerstone of future economic prosperity and robust decisions are dependent upon the availability of relevant, accurate and timely information.
Without being comprehensive, FEE wishes to draw preparers’ attention to issues which it believes require particular consideration in the current challenging economic circumstances - measurement of assets; impairment of financial and non-financial assets; going concern issues; disclosures and financial institutions aspects.
Reliable accounting will not solve the crisis, but will create transparency to identify significant matters, thus providing evidence of such and helping their resolution. The transparency principle lies at the basis of policy decision-making. It should equally apply to the private and the public sector.