US eases accounting standards for EU companies

The US Securities and Exchange Commission has responded to pressure from big European companies and lightened the reporting requirements for EU companies listed on the New York stock exchange.

The move comes at the same time as the European Central Bank has put its weight behind proposed reform of the controversial IAS39 rules.

EU companies have been lobbying the SEC ahead of the implementation of the new International Financial Reporting Standards and since the introduction of the Sarbanes-Oxley Act.

European companies have argued that the rules, which include retrospective accounting, are difficult to implement and are deterring companies from listing in New York.

Under the revised rules, foreign companies adopting IFRS for the first time up to January 2007 need only file two years of financial statements–one less than under the initial requirements.

EU companies listed on the New York Stock Exchange will still have to provide U.S. GAAP and IFRS reconciling information, if necessary.

Back at home, EU companies are likely to see a revised version of the IAS39 standards. Last week the International Accounting Standards Board revised the draft rule on how hedging against cashflows are accounted for.