|International Accounting Standards ("IAS")|
IAS, or International Financial Reporting Standards ("IFRS") as they are now named, are accounting standards which have been evolving over many years. The intention is that IFRS should be used and accepted internationally by the world's capital markets. This is subject to acceptance by individual countries. IFRS is promulgated by the International Accounting Standards Board (IASB).
The European Parliament and Council of Ministers passed IAS 2005 regulation requiring endorsed IFRS for accounting periods commencing on or after 1 January 2005 for EU incorporated and EU listed companies.
The endorsement process involves a proposal to endorse each IFRS standard in each official language of Member States by the Accounting Regulatory Committee (ARC). The private sector sponsored the creation of the European Financial Reporting Advisory Group (EFRAG) to provide advice to the European Commission and to the ARC.
IAS 2005 regulation contained a requirement to endorse all existing IFRS by December 2002, which has not yet been completed. The delay is due to absence of all necessary translations plus concerns over the acceptability of IAS 39 which would restrict hedge accounting in particular by banks.
EFRAG has reviewed all current standards and has publicly recommended that the ARC adopt them in full.
The ARC have now endorsed all standards except IAS 32 and IAS 39 both relating to (financial instruments). These standards are undergoing significant revisions, particularly in the area of hedge accounting. The IASB has been consulting very widely and held round tables with constituents so that it could learn about the concerns face to face.
The IASB has a very full agenda and currently is targeting to issue many revised standards and some new standards by the end of March 2004. These will be all mandatory standards that will be in force at 31 December 2005. Examples include new standards on business combinations, insurance and share based payments. Revised standards include pensions and deferred taxes.
The implementation of IFRS is a core part of the FSAP as it will mean that all listed companies in the EU will prepare financial statements on the same basis for the first time.
Source: specialist adviser