Taking another step towards convergence of international accounting standards, the European Union announced this week that foreign-based companies doing business in E.U. countries will no longer be required to reconcile their financial statements in accordance with E.U. standards, according to CFO.com.
The new regulation, which will be effective as of 2009, shadows a move made last year by the Securities and Exchange Commission to permit companies overseas to file their statements using International Financial Reporting Standards (IFRS). Such firms have previously been required to convert their statements to the U.S. generally accepted accounting principles (GAAP) format.
The new E.U. rule, though, will apply only to those companies based in countries that are on their way to convergence and plan to take on IFRS by the end of 2011.
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