Watered-down IAS39 provisionally backed by Member States

Date: 09/09/04

NATIONAL governments have provisionally backed a watered-down accounting standard so that it can be used by EU companies from 2005.

All member states, except the UK, Sweden and Denmark, approved the Commission's amended proposal to make parts of the standard - known as IAS39 - optional for certain sectors, such as banks.

A "clarified" proposal will now be presented to the Accounting Regulatory Committee on 1 October for a formal vote, a Commission spokesman said.

If approved, it could be officially endorsed by the Commission by January, although translation problems might delay the timing.

IAS39 is one of 40 International Accounting Standards that, under EU law, must be implemented by all companies listed on the stock market from 2005 and the only one not yet endorsed by the Commission.

It provoked an international row because of requirements to value certain financial instruments at fair value, which some member states, including France and Spain, claimed would lead to extreme volatility in bank share prices.

But other member states, notably the UK, have argued that making the standard optional would create confusion and hinder the main aim of merging the standards with US norms to create a fully global set of accounting rules.

The contested International Accounting Standard 39 has been provisionally approved on the basis of a an amendment to the Commission proposal which makes it optional for certain sectors such as banks.

European Commission: DG Internal Market: Financial Reporting: Accounting: Documents: ARC working document on IAS39, September 2004 http://ec.europa.eu/comm/internal_market/accounting/docs/ias/2004-09-ias39-proposal_en.pdf

European Commission: DG Internal Market: Financial Reporting: Accounting: International Accounting Standards http://ec.europa.eu/comm/internal_market/accounting/ias_en.htm

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