Table of Contents:
International accounting standards
Outline of the Community (European Union) legislation about International accounting standards
Topics
These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.
Internal market > Single market for capital
International accounting standards (IAS)
Document or Iniciative
Regulation (EC) No 1606/2002/EC of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards [See amending act(s)].
Summary
The objective of this Regulation is the adoption and application of international accounting standards in the European Union (EU) in order to harmonise the financial information presented by companies. The aim is to ensure a higher level of transparency and comparability of financial statements.
Definitions
The International Financial Reporting Standards (or the former International Accounting Standards – IAS) are adopted by the London-based International Accounting Standards Board (IASB).
Scope
Since 2005 all listed EU companies (including banks and insurance companies) must prepare their consolidated financial statements in accordance with the IFRS. Member States may also permit or require EU-listed companies to use this standard for their annual accounts and non EU-listed companies for their annual and/or consolidated accounts.
Endorsement mechanism
For effective implementation, the adoption of an International Accounting Standard should provide an accurate and honest image of the company’s financial situation and performance, correspond to European public interests and meet the criteria of understandability, relevance, reliability and comparability required of the financial information needed for making economic decisions and assessing the stewardship of management. The Commission is consulting with the Committee of the European Securities Regulators (CESR) to develop a common approach towards enforcing these rules.
The system is to be subject to an endorsement mechanism with a two-tier structure:
- a regulatory level, with an Accounting Regulatory Committee made up of representatives from the Member States and chaired by the Commission. On the basis of the Commission’s proposals, this Committee decides whether the IRFS are to be adopted. Its aim is to ensure full transparency and accountability vis-à-vis the Council and Parliament;
- a technical level, with an Accounting Technical Committee, the European Financial Reporting Advisors Group (EFRAG), made up of accounting experts from the private sectors of several Member States. This Committee provides the support and expertise needed to assess the IFRS and to advise the Commission on whether or not to adopt the IFRS being considered.
References
| Act | Entry into force | Deadline for transposition in the Member States | Official Journal |
|---|---|---|---|
|
Regulation (EC) No 1606/2002 |
14.9.2002 |
– |
OJ L 243 of 11.9.2002 |
| Amending act(s) | Entry into force | Deadline for transposition in the Member States | Official Journal |
|---|---|---|---|
|
Regulation (EC) No 297/2008 |
10.4.2008 |
– |
OJ L 97 of 9.4.2008 |
The successive amendments and corrections to Regulation (EC) No 1606/2002 have been incorporated in the original text. This consolidated versionis of documentary value only.
Related Acts
Regulations
Commission Regulation (EC) No 1126/2008 of 3 November 2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council (Text with EEA relevance) [Official Journal L 320 of 29.11.2008].
Commission Regulation (EC) No 1569/2007 of 21 December 2007 establishing a mechanism for the determination of equivalence of accounting standards applied by third country issuers of securities pursuant to Directives 2003/71/EC and 2004/109/EC of the European Parliament and of the Council [Official Journal L 340 of 22.12.2007].
Decision
Commission Decision 2008/961/EC of 12 December 2008 on the use by third countries’ issuers of securities of certain third country’s national accounting standards and International Financial Reporting Standards to prepare their consolidated financial statements (notified under document number C(2008) 8218) (Text with EEA relevance)
Directive
European Parliament and Council Directive 2003/51/EC of 18 June 2003 amending Council Directives 78/660/EEC , 83/349/EEC , 86/635/EEC and 91/674/EEC on the annual and consolidated accounts of certain types of companies, banks and other financial institutions and insurance undertakings [Official Journal L 178 of 17.07.2003].
The Directive aims to harmonise the accounting rules applying to companies and other bodies not subject to European Parliament and Council Regulation (EC) No 1606/2002 on the application of international accounting standards to listed companies. It thus removes any discrepancy between the accounting directives and the Regulation on the application of international accounting standards (IFRS) since it makes it possible to apply the IFRS accounting options to companies that retain the accounting directives as their basic legislation. The Directive also extends beyond the financial aspects the risk analysis made in companies’ management reports. It also spells out the compulsory content of an audit report.