US regulator may ease burden on European companies

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US regulators yesterday signalled that they could ease the financial reporting burdens placed on European companies sometime between 2007 and 2009.

European companies with US share listings currently have to issue accounts under US reporting rules as well as the international standards that apply in the European Union.

But the US Securities and Exchange Commission and the European Commission believe convergence between US and international accounting standards could end the need for reconciliation between the two sets of reporting rules.

If the reconciliation requirement is dropped, European companies with US listings would not have to file accounts with the SEC under US reporting rules.

William Donaldson, SEC chairman, yesterday reaffirmed his support for convergence between US and international accounting standards after a meeting with Charles McCreevy, the EU internal market commissioner. They discussed a “road map” by SEC staff that could eliminate the reconciliation requirement.

“The road map establishes a goal of eliminating the requirement as early as possible between now and 2009 at the latest,” said the SEC.

The European Commission said the road map could end the reconciliation requirement as soon as 2007.

Mr Donaldson and Mr McCreevy also discussed calls by EU companies for a new arrangement that would increase their ability to end their reporting obligations with the SEC. Under the existing arrangement, EU companies with more than 300 US investors must continue to file accounts with the SEC, even if they drop their US share listings.

Meanwhile, William McDonough, chairman of the US Public Company Accounting Oversight Board, said audit firms would be expected to lower the fees they charge companies next year after recent rises prompted by the Sarbanes-Oxley legislation.

“We are making it clear to the auditors that we expect their costs to come down,” Mr McDonough told the House committee on financial services in Washington.

The big four accounting firms have doubled their audit fees with US clients because of work on internal controls mandated by the Sarbanes-Oxley legislation, according to a survey by the Corporate Executive Board, a consulting firm.

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