Accountancy associations are warning that national governments and the European Commission risk undermining the competitiveness of EU businesses and capital markets by delaying endorsement of a revision of international accounting rules.

The Association of Chartered Certified Accountants (ACCA), an international body, has said that new rules published on 12 November by the International Accounting Standards Board (IASB) are a “significant improvement” on the old standards. “Failure” by the EU to endorse the standards risks leaving it behind a vanguard of countries expected to adopt the standards quickly, it said.

The IASB has made the changes optional from this year and mandatory from 2013 for businesses in the 100 countries that use its standards, including the EU’s 27 member states.

ACCA and also the Institute of Chartered Accountants in England and Wales (ICAEW), believe that complications caused by continued use of old standards could dissuade some international investors. They also argue that the revised rules make balance-sheets less volatile, a potentially significant benefit for EU businesses.

Many governments believe that the IASB’s old rules, which required companies to value many assets at their market price (known as ‘fair value’ accounting), have contributed to the sharp deterioration of balance-sheets during the current financial crisis.

‘Fair value’ concerns

Concern about the effect of these rules on an asset’s valuation prompted EU governments, especially France, to put pressure on the IASB to bring forward its revision of its standards, which had been due for publication next year. The European Commission had hoped to incorporate the revised standard into EU law this year. But a spokesperson for Charlie McCreevy, the European commissioner for the internal market, said that the EU will now make no decision before 2010.

That statement followed a meeting of national officials of 11 November at which France and Italy said the standard should be rejected, arguing that it could increase, rather than lessen, use of fair-value rules. Germany is also believed to have raised concerns.

Concerns about fair-value rules prompted Jörgen Holmquist, the Commission’s director-general for internal market and services, to write to the IASB on 4 November.

But ACCA and the ICAEW have warned that failure to support the IASB could undermine the EU’s attempt to reduce the use of marked-to-market rules, as the EU could weaken the IASB’s position in talks on a harmonisation of its rules with those of the US’s Financial Accounting Standards Board (FASB).

In September, the G20 called for a single set of harmonised rules to be in place globally by June 2011.

ACCA and the ICAEW say that revisions being drafted by the FASB would require greater use of fair-value rules than in the standards the IASB has presented. “It would have been very advantageous had Europe stuck firmly behind these [IASB] proposals, which contain much less ‘fair value’ than the US is considering,” said Nigel Sleigh-Johnson of ICAEW.