"What is important to users is transparency, and comparability and consistency in financial reports. But seeking to make changes by the end of October, as the Commission proposes, runs the risk that this will not be maintained and such changes could result in unhelpful reporting. Investors worldwide need one set of financial reporting requirements, not many variations," commented Liz Murrall, Director of Corporate Governance and Reporting at IMA.

"Although the current credit crisis requires swift measures by governments and regulators, fundamental changes in accounting should be implemented only after due process and the involvement of all stakeholders," she added.

Murrall was responding to the Commission's announcement last week that it had adopted amendments to accounting standards intended to mitigate the consequences of the recent turbulence in financial markets. The amendments are designed to ensure that EU companies have the same flexibility as their American competitors to reclassify assets held-for-trading into the held-to-maturity category. In these circumstances, financial institutions in the EU would no longer have to reflect market fluctuations in their financial statements for these kinds of assets. The changes will apply as from the third quarter of 2008.

Internal Market Commissioner Charlie McCreevy said: “By adopting these amendments, the Commission has responded in record time to the request of the ECOFIN Council on October 7. I commend the European Parliament and the Member States in the Council without whose excellent co-operation, this would not have been possible. This shows once again that the EU is responding quickly and decisively to the current financial turbulence. I also welcome the speed with which the International Accounting Standards Board and all bodies involved in the endorsement process have responded to the ECOFIN conclusions."

The ECOFIN Council adopted the following conclusions in relation to accounting standards:

"We underline the necessity of avoiding any distortion of treatment between US and European banks due to differences in accounting rules. We take note of the flexibility in the application of mark to market valuation under IFRS as outlined in recent guidance from the IASB. Ecofin strongly recommends that supervisors and auditors in the EU apply this new guidance immediately. We also consider that the issue of asset reclassification must be resolved quickly. To this end, we urge the IASB and the FASB to work together on this issue and welcome the readiness of the Commission to bring forward appropriate measures as soon as possible. We expect this issue to be solved by the end of the month, with the objective to implement as of the third quarter, in accordance with the relevant procedures."