Programme to converge EU-US accounting standards

EU and US accounting bodies have formally agreed to converge accounting standards, following the signing of a Memorandum of Understanding between the United States Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB).

The memorandum outlines a programme for convergence between US Generally Accepted Accounting Practices (GAAP) and International Financial Reporting Standards (IFRS).

According to a European Commission statement, this convergence programme is an important step in bringing about mutual recognition of accounting standards between the EU and the US, and reflects comments made by Committee of European Securities Regulators (CESR) concerning equivalence between GAAP and IFRS.

The convergence work covers those areas that the US Securities Exchange Commission (SEC) has identified in its Roadmap as important for lifting the GAAP reconciliation requirement in 2009, at the latest.

Charlie McCreevy, European Commissioner for Internal Market and Services, said “I welcome this joint work programme, which balances amendments to current standards with longer-term considerations, while rightly focusing on areas where there is a clear business case for improved accounting standards. It is crucial that business in the EU is afforded a period of stability to get used to the new standards which have been applicable since 1 January 2005.”

The work programme also underlines the need for consistent interpretation and timely guidance on application of standards.

More information on accounting policy in the EU is available at:

http://europa.eu.int/comm/internal_market/accounting/index_en.htm