20. ACCOUNTING STANDARDS
(24060)
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Draft Directive 2002/0112 (COD) concerning amending Council Directives 78/660/EEC, 83/349/EEC, 86/635/EEC and 91/674/EEC on the annual and consolidated accounts of certain types of companies, banks and other financial institutions and insurance undertakings (the EU Accounting Directives).
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| Legal base: | Article 44; co-decision; qualified majority voting
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| Department: | Trade and Industry
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| Basis of consideration: | EM of 5 December 2002
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| Previous Committee Report: | None; but see (23522) 9730/02: HC 152-xxxvii (2001-02), paragraph 14 (17 July 2002)
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| To be discussed in Council: | Not known
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| Committee's assessment: | Politically important
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| Committee's decision: | Cleared
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Background
20.1 Last July we cleared a draft Directive[56]
which would amend three of the EU Accounting Directives,[57]
on which current EU accounting requirements are primarily based,
in order to:
- remove all existing conflicts between the Accounting Directives
and International Accounting Standards (IAS);
- ensure that all optional accounting treatments currently available
under IAS are available to EU companies which do not prepare their
annual or consolidated accounts in accordance with the IAS Regulation
and continue to have the Accounting Directives as the basis of
their accounting legislation; and
- update the structure of the Accounting Directives to provide
a framework for financial reporting both consistent with modern
practice and flexible enough to allow for future developments
in IAS.
The document
20.2 This document is a revised draft from Working Group
negotiations endorsed by the Council, which it is hoped the European
Parliament will agree during its first reading of the Commission
draft. The main changes relate to the proposed exemption for medium-sized
companies from the requirement to report on non-financial matters,
the deletion of existing special accounting provisions for Lloyds
and the inclusion of amendments to Directive 86/635/EEC on banks
and other financial institutions.[58]
The Government's view
20.3 The Parliamentary Under-Secretary of State for Competition,
Consumers and Markets, Department of Trade and Industry (Miss
Melanie Johnson) tells us:
"The Government is content with the amended proposals. They
will enable companies to prepare their accounts using modern international
practices. The Government is pleased to have negotiated an amendment
to the Commission proposal that means the requirement to publish
non-financial information is now tied more closely to information
that is relevant to the business, and that Member States will
have the option to exclude medium-sized companies from the requirement.
This prevents the possibility that UK medium-sized companies would
be burdened with a requirement to include non-financial as well
as financial information in the annual report (the smallest companies
can already be exempted completely from the requirement to publish
an annual report).
"An amendment from the UK (with the support of Lloyds) to
remove the existing annex on provisions relating to Lloyds from
the Insurance Directive has also been accepted. This brings the
financial statements of Lloyds insurance market into line with
those of insurance companies. The annex means that syndicates
cannot close their accounts until at least two years after the
end of the financial year, rather than closing them at the end
of the financial year.
"The Government supports the inclusion in the revised proposal
of amendments to Directive 86/635/EEC covering banks and other
financial institutions. It is important that all the Accounting
Directives are amended at the same time."
20.4 The Minister encloses a partial Regulatory Impact
Assessment with her Explanatory Memorandum, which gives a generally
favourable endorsement of the original draft similar to her previous
endorsement of the proposal.
Conclusion
20.5 We cleared the original draft Directive on the
understanding that the detail would match the intention to enhance
accounting practice in the EU and to comply with internationally
accepted standards. The revised proposal would contribute towards
ensuring the detail does match the intention and we are content
to clear this document too.
56
See headnote to this paragraph. Back
57 Council
Directive 78/660/EEC (requirements in respect of annual accounts
of companies), Council Directive 83/349/EEC (requirements in respect
of consolidated accounts of companies), and Directive 91/674/EEC
(requirements in respect of annual and consolidated accounts
of insurance undertakings). Back
58
Council Directive 86/635/EEC(requirements in respect of annual
and consolidated accounts of banks and other financial institutions). Back
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