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[LONDON] The European Union will play an active role in a review of the accounting principles which underpin the way books are checked for companies around the world, France's top accounting standards official has said.
Listed firms in the 28-nation EU must use book-keeping rules from the International Accounting Standards Board (IASB), which is reviewing the concepts underpinning its rules.
The IASB has faced pressure to re-introduce the concept of "prudence", or erring on the side of caution, if a rule is unclear in the way it impacts any given set of accounts. Accountants argue against any bias, but policymakers say the financial crisis showed IASB rules were found wanting.
"Everyone understands prudence differently," said Patrick de Cambourg, chairman of the French Accounting Standards Authority (ANC), noting the EU's accounting advisory body EFRAG will take a close look at planned changes.
"We can now take time to consider what are the conceptual options we want to fix," he told Reuters.
Europe's relations with the IASB, which declined to comment, face more scrutiny when the European Commission reports on a decade of using the global rules. De Cambourg's comments mark a public shift in Europe's attitude to the global rules it adopted in 2005.
The European Financial Reporting Group or EFRAG advises the EU on adopting IASB rules and has a new board on which de Cambourg sits, with a remit to consider the wider public interest.
He says this restores sovereignty to book-keeping rules in the EU after EFRAG had limited itself to technical advice.
"When you have a link between sovereignty and standard setting ... then endorsement has to be a real decision, we have to measure the pros and cons," Mr de Cambourg told Reuters.
"I am in favour of standard setting with your eyes wide open. We need to focus on relevance in accounting rules," the former head of French accounting firm Mazars added.
Europe has largely adopted IASB rules without changes to avoid putting off the United States from switching to the global standards as well, but de Cambourg said it was now clear the United States would not be doing this.
The rush to change accounting rules for banks in the heat of the financial crisis is also over, giving Europe more time to scrutinise book-keeping rules, he said.
Mr de Cambourg said "two-way traffic" was crucial with the IASB, meaning the EU would no longer take global rules unquestioningly. If this works well, he said, it would reduce the likelihood of the EU having to tweak IASB rules.