EU Parliament OKs Accounting Rules
STRASBOURG, France (AP) _ Hoping to avoid any Enron-style collapses within the European Union, the European Parliament backed plans Tuesday to require listed European firms to prepare their books using International Accounting Standards, but pushed the deadline back two years to 2007.
The 626-member European Parliament voted 492 to 5 with 29 abstentions endorsing plans by the EU’s head office, which called for the EU-wide introduction of rules as set by the London-based International Accounting Standards Board or IASB.
Backers of IAS argue its broader, principle-based approach would have exposed the problems at Enron earlier than the U.S. standard, known as GAAP.
``These (IAS) standards should, wherever possible and provided that they ensure a high degree of transparency and comparability for financial reporting ... be made obligatory for use by all publicly traded EU companies,″ the EU assembly said in its adopted proposal.
Finance ministers from the 15 EU governments had approved the proposal in December. It set a deadline of 2005, except companies that currently apply GAAP accounting standards would not have to apply IAS until 2007.
The parliament amended the bill to give all companies until 2007, meaning it must be reconsidered by EU governments.
The parliament said more time was needed to train accountants and to translate the standards in all of the EU’s 11 official languages.
It also calls on the EU’s executive office, the European Commission, to push for the same international standards be adopted in the United States following the Enron collapse.
``A lot of what happened to Enron would almost certainly not have happened if international accounting standards had been adopted and applied,″ said British conservative Lord Inglewood.