European Union (EU) nations has signaled their support for granting equivalence to the accounting rules of certain third countries as from next year, local media reported on Saturday.
The European Securities Committee, which groups national regulators of EU member states, voted on Friday to support proposals by the European Commission to grant equivalence to the Generally Accepted Accounting Principles (GAAPs) applied by certain third countries, without specifying which countries.
"This is a tremendous step in our objective of promoting the efficiency of capital markets and marks the result of several years of hard work," said European Internal Market and Services Commissioner Charlie McCreevy.
The proposals will now pass to the European Parliament and EU governments for formal opinions and then to the commission for adoption.
The EU has the objective of arriving at a common set of worldwide accounting standards for listed companies. For the interim, a key part of this strategy is to eliminate existing costly and burdensome reconciliation requirements between the EU and its key trading partners.
Through decisions on equivalence, foreign issuers listed in the EU will be allowed to continue preparing their accounts using their GAAP instead of having to restate their financial statements using International Financial Reporting Standards (IFRS) as adopted by the EU.
The EU has planned to decide on equivalence of accounting rules applied by the United States, Japan, China, Canada, South Korea and India by 2008.
But the commission said it will review the situation of China, Canada, South Korea and India by 2011 at the latest, indicating only the United States and Japan are in the list for approval by the year end.
Source: Xinhua
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