The adoption of International Accounting Standards in the European Union

Abstract

This paper discusses the IASB's process of developing accounting standards for adoption by listed companies within the European Union. Issues addressed include the structure of the IASB, its role as a global standard setter and its programme. Particular attention is given to two topics that are both controversial and important, accounting for financial instruments and reporting financial performance.

Notes

¹The author is UK liaison member of the International Accounting Standards Board and a Senior Associate of the Judge Institute of Management Studies, Cambridge. Any opinions expressed in the paper are the author's own, rather than official views of the Board. The factual content of the paper is based on the situation in December 2003 and will inevitably be out of date by the time of publication. The author would like to thank his colleagues Richard Barker, Tom Seidenstein, Sandra Thompson and David Tweedie for critical comment on an earlier draft, but they are not responsible for any remaining errors or any of the views expressed in the paper.

²A recent study by PricewaterhouseCoopers (2004) shows that 262 listed holding companies in Germany, out of a total of 789, were using IFRS.

³Of the three classified as having no current intention to converge, Iceland will be required to adopt IFRS for listed companies by 2005, by virtue of its membership of the European Economic Area. Another, Japan, has a liaison relationship with the IASB.

⁴The survey shows 91 countries in this category, excluding Australia and New Zealand, both of which intend to adopt IFRS.

⁵The other standards that were inherited from the IASC and were subsequently improved were approved by the Commission in their original form in 2003, and the IASB improvements, which were issued in December 2003, are currently going through the Commission's approval process.

⁶For simplicity of exposition all future references will be to the IASB, but the ASB has been, and remains, involved in all aspects of the project.

⁷The theoretical arguments underlying the IASB's view are explained in more detail in Richard Barker's paper, ‘Reporting Financial Performance’ (2004).

Additional information

Notes on contributors

Geoffrey Whittington

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