European audit programme ‘could undermine IFRS’

5 Sep 13
Some amendments proposed by MEPs to a European Union programme to reform financial reporting and auditing rules across the economic bloc could slow the global spread of International Financial Reporting Standards, the Federation of European Accountants has warned.

By Richard Johnstone | 5 September 2013

Some amendments proposed by MEPs to a European Union programme to reform financial reporting and auditing rules across the economic bloc could slow the global spread of International Financial Reporting Standards, the Federation of European Accountants has warned.

In a letter published on Wednesday, FEE president André Kilesse and chief executive Olivier Boutellis-Taft said that some of the amendments proposed in the European Parliament to the scheme for the period of 2014-2020 could ‘be a significant retrograde step’. The programme is intended to review the work and funding of auditors and accountants.

They went on to say ‘we are concerned that some of the amendments proposed appear to be largely based on misunderstandings or misinterpretation of the facts’.

Kilesse and Boutellis-Taft warned that the drive to adopt IFRS across countries and governments would be hurt by any ‘specific EU financial reporting standards or different EU interpretations of IFRS’ and this would be ‘detrimental to Europe’.

They added: ‘In 2002, the EU has shown clear leadership by adopting IFRS and leading the way toward global standards. The EU leadership is recognised on the world stage and should be maintained. This matter should be considered from an economic and strategic perspective.

‘These are important public interest reasons and the main motives why FEE has always supported global, high quality, principles-based standards. The Group of 20 leaders have rightly acknowledged that global markets need global accounting standards and indications of a potential return to European or national standards would be a significant retrograde step.’

The letter, which was sent to Theodor Dumitru Stolojan, who is both the vice chair of the European Parliament’s committee on economic and monetary affairs, and the rapporteur on the plans, also said it would be ‘counterproductive’ to undermine the International Accounting Standards Board.

The FEE, which represents more than 700,000 accountants working in both the public and private sectors, said the EU should not ‘move backwards’ away from international standards.

‘A European standard setter producing European standards would not only be costly but more importantly it would isolate Europe on the world stage, which would not contribute to Europe’s economic recovery.

‘It is unlikely to be successful and would move back the debate on financial reporting to a battle between national differences amongst the Member States.’

Kilesse and Boutellis-Taft added that, apart from IFRS, the EU has a poor record in harmonising accounting rules, and moves to create any European standards could have negative consequences.

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