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March 6, 2011

EC urges US to make “firm commitment” to IFRS

The European Commission has encouraged the US
to make a positive decision towards adopting IFRS, blaming
convergence between IFRS and US GAAP for higher costs to EU
companies.

“Convergence between IFRS and US accounting
standards imposes costs on EU companies that are increasingly
difficult to justify without a firm commitment by the US to IFRS,”
the EC said in its response to the strategy review of the IFRS
Foundation.

The EC signaled to the US Securities and
Exchange Commission (SEC) that the US adoption of IFRS is essential
and that the US could lose its international influence if it is to
prolong the adoption of IFRS.

The EC comment letter said the winding-down of
the International Accounting Standards Board (IASB) – Financial
Accounting Standards Board (FASB) convergence programme, combined
with a more rigorous agenda-setting and due process, should in
practice lead to a reduction in the peace of the IASB’s standard
setting activity.

“This should enhance stability and
comparability across time of financial information produced on the
basis of IFRS, which should benefit all users of this information –
investors, preparers, regulators, etc.” the EC said in its
summation to the IFRS Foundation.

The SEC is expected to make a decision on IFRS
adoption within the next 18 months.

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