Accountants voice concern over move to new standards

Date: 09/11/00

EUROPEAN Commission plans to make large EU firms comply with international accounting standards could fail unless the new body overseeing the changeover has its foot on the accelerator and not the brake, according to the Union's biggest accounting organisation.

The warning from the Institute of Chartered Accountants of England and Wales (ICAEW) comes as the Commission prepares to flesh out plans which would require EU firms listed on stock markets to use international standards for their annual accounts by 2005.

The formal proposals, due to be published before Christmas, will include a controversial 'endorsement mechanism', or regulatory body, which is likely to combine EU-level technical and political oversight of international standards developed by the International Accounting Standards Commit-tee (IASC). The body is expected to examine the IASC principles to ensure that they can be adopted by Union firms and do not lead to a decline in quality.

But ICAEW president Graham Ward insists the endorsement mechanism should drive the changeover to international norms and not hinder it. "What we do not want is something that sits on the side lines and then crosses its arms and says 'no'. We want something that is active when an item is on the agenda or even suggests items for the agenda," he said.

He added that adopting the standards was crucial because it offers firms access to cheap capital. Investors would be able to compare and analyse company accounts more easily and firms which conformed to less familiar national systems would no longer have to pay a 'risk premium'.

Ward also said the profession had no objections to footing some of the bill for the new regulatory body, provided others, including the Commission, paid their share.

European Commission plans to make large EU firms comply with international accounting standards could fail unless the new body overseeing the changeover has its foot on the accelerator and not the brake, according to the Union's biggest accounting organisation, the Chartered Accountants of England and Wales (ICAEW).