The EC experience of harmonization: part 1

Article Abstract:

The European Community's (EC) company law harmonization program is leading to the unification of accounting standards and rules. The five directives adopted by the Community are for the purpose of providing equivalent protection to members and creditors and are not primarily intended for investor protection. The Fourth Directive delineated the basic structure of accounting in the EC, and its second proposal will increase harmonization and simplify the accounting obligations of small companies. The Seventh Directive deals with the audit, preparation, and publication of consolidated accounts. The Eighth Directive delineates the minimum qualifications for auditors. The Directive of Dec 8, 1986 concerns the annual and consolidated accounts of financial institutions and banks. The Directive of Feb 13, 1989 concerns the obligation of credit institution branches established in member states with head offices outside that state in regard to the publication of accounting documents.

European Union, Harmonization of laws, European Community

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Accounting strangely for investments: the treatment of diminutions in ED 55 is both unpopular and unprecedented

Article Abstract:

The Accounting Standards Committee's Exposure Draft (ED) 55, Accounting for Investments, generally adheres to current practice with two significant exceptions: the marking to market of readily marketable investments is extended to all enterprises, and the recording of diminutions and gains and losses on disposals of revalued investments in the profit and loss account is based not on historical cost but on the investments' carrying value. The ED's treatment of diminutions is unprecedented and unpopular. Revaluations are and should be oriented to the balance sheet as they give investors a clear picture of an enterprise's resources.

Accounting and auditing, Corporation reports, Company reports, Great Britain, Accounting Standards Committee

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