FEE believes that accounting diversity is one of the major obstacles to achieving deep and liquid European capital and financial markets and to obtaining the full benefits of the single market in Europe. As a way of overcoming that diversity, for both global and European harmonisation of financial reporting standards, it comes out strongly in favour of the work of the International Accounting Standards Committee (IASC) and the International Accounting Standards (IAS) the Committee is delivering. It strongly opposes the creation of "additional regional standard setting bodies", and warns against the risk of the EU Accounting Directives not keeping pace with international developments. At present, there are incompatibilities and inconsistencies between EU and IAS rules."If compliance with the EU Directives is required, the Directives will need to keep pace with international developments. This is a cumbersome process since it means not only that the Accounting Directives need to be brought in line with IASs to facilitate the use of these standards but also that amending of the Directives should be on a timely basis in order to avoid to the extent possible temporary differences", says FEE.The EU Commission's approach over the last few years has been to tread a middle road between IASs and EU accounting rules, while avoiding the need to introduce any new legislation. It has tried to make European companies aware of the possibility of using international standards to draw up their consolidated accounts, without conflicting with EU requirements. But the accountancy profession has for some time been pointing up the inconsistencies and unworkable standards in practice."The prospect of...

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