Business organisations on Friday cheered a decision by US and European regulators to work toward removing the need for European Union companies to file additional accounts in the US.
But they warned that final judgment on the agreement would depend on how differences between US and international accounting standards were narrowed.
The Securities and Exchange Commission and the EU this week announced a “road map” for convergence between the two sets of standards.
The regulators said that by 2007 at the earliest, and no later than 2009, convergence could end the need for European companies with US share listings to “reconcile” or explain how their accounts would look different under US accounting standards.
William Donaldson, chairman of the SEC, said the plan's success would depend, among other things, on a “detailed analysis” by the SEC of the “faithfulness and consistency” of the application and interpretation of international accounting standards across companies and jurisdictions.
Charles McCreevy, the EU internal market commissioner, said on Friday that the Paris-based Committee of European Securities Regulators would conduct its own analysis on the consistency of international accounting standards across EU states alongside the SEC's examination.
Unice, the European employers' association, which had complained about the costs of reconciliation, welcomed the agreement.
“This is very important for companies because international accounting standards add value only if there is equivalence with US and Japanese standards,” said Jerome Chauvin, director of legal affairs.
But he warned: “As always, the devil lies in the detail. We have to see where the pendulum will fall. We must find a good balance so it is not just Europe that has to move. All parties have to make some concessions.”
International accounting standards were introduced across the European Union this year.
“I am delighted at the news from the SEC,” said Sir Digby Jones, director-general of the CBI, the British employers' federation.
“It shows that at lastthey are not just listeningto the special issues that apply to [European] companies but also doing something about it.”
But he added: “There is still a way to go; we are nowhere near to a position where companies would not feel the US is an expensive place to be in listing terms.”
The European Union is currently examining whether US companies listed in the EU should continue to be allowed to file accounts under US standards. The agreement struck in Washington is likely to increase the chances that US groups will not be required to file reconciliations.
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