The European Commission has welcomed the Accounting Regulatory Committee's unanimous vote in favour of adopting International Accounting Standards (IASs), including related interpretations (SICs). This adoption includes all existing IASs and SICs, except for IASs 32 and 39 and related SICs 5, 16 and 17, all of which deal with the accounting and disclosure of financial instruments and which the IASB, in cooperation with European accounting experts is still working intensively to revise. The endorsement of standards is a crucial element of the IAS Regulation requiring listed companies, including banks and insurance companies, to prepare their consolidated accounts in accordance with International Accounting Standards (IAS) from 2005 onwards (see IP/02/827, IP/01/200 and Frequently Asked Questions in MEMO/01/40). Unlike Directives, EU Regulations have the force of law without requiring transposition into national legislation. Member States have the option of extending the requirements of this Regulation to unlisted companies and to the production of individual accounts.
The Accounting Regulatory Committee has taken the key first step in the process of endorsing IASs. This sends a clear message to the 7000 or so listed EU companies that they must now start preparing for 2005. Furthermore, it does not prejudge in any way the IASB's due process on IASs 32 and 39 and gives the IASB and its constituents time to improve and refine both accounting standards on financial instruments by 1 January 2005. In a second step, the Commission and the ARC will consider revised IAS 32 and 39 for endorsement as soon as available, i.e. at the latest in March 2004. Heads of Government have made clear at successive European Councils that they want the conditions for the creation of an integrated capital market in place by 2005. The IAS Regulation is a big step towards that. By putting an end to the current Tower of Babel in financial reporting, it will improve competition and transparency and make the free movement of capital much easier.
The IAS Regulation requires that the measures (adoption of standards) necessary for the implementation of the Regulation should be adopted in accordance with existing regulatory comitology rules, which means that the decision of the Accounting Regulatory Committee will now be sent to the European Parliament for information. The formal adoption of this executive measure, to take the form of a Commission Regulation is expected to take place in September.
To contribute further towards the consistent application of IASs across the EU, endorsed IAS will be published in all official EU languages in the EU Official Journal soon after the final approval expected in September. The first endorsement process was delayed by about six months, because it was important that these translations were of high quality (see IP/02/1967) In total, there are at present 34 existing IASs (incl. IASs 32 and 39) and 31 existing SICs (incl. SICs 5, 16 and 17), which cover about 1.500 pages.