Washington: A top EU regulator has welcomed a move by the U.S Securities and Exchange Commission to abolish rules that had obliged publicly-listed European companies to comply with U.S accounting standards.
SEC regulators approved new rules which will no longer oblige publicly-traded EU companies with operations in the United States to file accounting reports that comply with the U.S’ Generally Accepted Accounting Principles (GAAP).
“They did approve it unanimously,” Kevin Callahan, an SEC spokesman, said of the new rules, which will make it easier for EU companies to operate in the United States.
The SEC’s move will also make it cheaper for EU companies to do business in the world’s biggest economy, as they will no longer have to hire accountants to file accounting statements under GAAP.
“I very much welcome this historical step by the SEC on the road towards global accounting standards. I have congratulated SEC Chairman (Christopher) Cox for this decision which will benefit EU companies with a U.S listing,” said European Internal Market and Services Commissioner Charlie McCreevy.
“We are making major strides towards one global accounting language and many more countries are likely to follow,” McCreevy said.
Publicly-traded EU companies, and firms operating in the European Union, are required to file accounting statements under International Financial Reporting Standards (IFRS). Publicly-traded American firms file their accounts under GAAP.
IFRS accounting rules are also used in other parts of the world, including Hong Kong and India.
The SEC’s move marks a turnaround from a tightening up of accounting oversight in the wake of several major corporate scandals several years ago, especially the collapse of the former energy trading firm Enron.