EC Unveils Changes To Accounting Rules

by Ulrika Lomas, for LawAndTax-News.com, Brussels

02 November 2004

The European Commission on Thursday published a number of proposed revisions to European accounting rules, designed to boost the confidence of investors in the financial reporting of businesses within the EU.

The four key revisions of the EU’s Accounting Directives are:

• Establishing that board members are collectively responsible for financial statements and key non-financial information;
• Making unlisted companies’ transactions with related parties more transparent;
• Ensuring that all companies provide full information about off-balance sheet arrangements, including Special Purpose Vehicles which may be located offshore; and
• Making listed companies issue an annual “corporate governance statement”.

Speaking with regard to the planned rule changes, Internal Market Commissioner Frits Bolkestein explained:

“Recent financial scandals show that investors and the public need more protection against cheats. We want to kill four birds with one stone, by ensuring that company boards are responsible for what they tell the markets, that transactions with related parties are explained, that accounts reflect off-balance sheet arrangements and that markets know how companies are governed. That will build confidence in EU capital markets and reduce malpractice.”

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