Joe Costello (Dublin Central, Labour)
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Question 103: To ask the Minister for Enterprise, Trade and Employment his views on the proposed treatment by the European Commission of a new accounting standard issued by the International Accounting Standard Board; and if he will make a statement on the matter. [28330/04]

Michael Ahern (Cork East, Fianna Fail)
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The accounting standard in question is international accounting standard 39, IAS 39, which relates to the measurement and recognition of financial instruments. IAS 39 is one of a suite of accounting standards issued by the International Accounting Standards Board, IASB, an independent accounting standards making body, proposed for adoption under Regulation EC No. 1606/2002 of 19 July 2002. This regulation relates to the application of international accounting standards and will require publicly traded EU companies, including banks and insurance companies, to prepare, from 2005 onwards, their consolidated accounts in accordance with International Accounting Standards, IAS, adopted by the EU.

In line with the provisions of Regulation EC No. 1606/2002, it is the European Commission which adopts these standards, assisted by a committee — the accounting regulatory committee, ARC — which includes member state representatives. IAS 39 was the subject of protracted negotiation between interested parties, and in the context of the adoption procedures for the standard, the European Commission placed a number of proposals to the accounting regulatory committee, stating a preference for a course of action which would remove elements of the standard as drafted by the IASB.

The Irish authorities had serious concerns with this approach on a number of grounds, legal and technical on one level, and on another in terms of precedent and the potential for "Europeanised" rather than truly international standards, thus presenting the risk of undermining the status and quality of financial reporting in the EU. In addition, this approach had the potential to jeopardise the international accounting project, aimed, ultimately, at global convergence of financial reporting standards. Another ground for concern was the danger of imposing increased costs on EU companies seeking access to international capital markets. Accounting and banking interests in Ireland supported the stance taken by the Government.

In the event, the European Commission received sufficient support at the accounting regulatory committee meeting on 1 October to enable it to proceed with the adoption of its proposal to endorse the truncated IAS 39 standard. Ireland, along with a number of other member states did not support the Commission's proposal at that meeting.