Theory

Northwestern Journal of International Law & Business

Volume 25 Issue 3 Spring Spring 2005

The Use of International Accounting Standards in the European Union

Alexander Schaub

Follow this and additional works at: http://scholarlycommons.law.northwestern.edu/njilb Part of the Accounting Law Commons, and the Comparative and Foreign Law Commons Recommended Citation

Alexander Schaub, The Use of International Accounting Standards in the European Union, 25 Nw. J. Int'l L. & Bus. 609 (2004-2005)

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The Use of International Accounting Standards in the European Union

Dr. Alexander Schaub*

2005 is a watershed year for the application of International Accounting Standards (1ASs) in the European Union. From the first of January this year, all listed European companies must prepare their consolidated accounts using IASs or International Financial Reporting Standards (IFRSs).1 This requirementrepresentsa quantum leap in the use of a single consistent set of accounting standardsfor capital markets in the European Union. I. THE BACKGROUND OF THE E.U. DECISION TO USE IASS

A. Creation of Internal Market The E.U. treaty does not expressly provide for the harmonization of accounting standards as a Community objective. Rather, this objective has developed organically from the need to harmonize company law requirements for the creation of an internal market.

Because of the substantial economic, social, welfare and political benefits, the E.U. treaty fixes as a common objective for Member States the

* Dr. Alexander Schaub has been Director-General for the Internal Market and Services in the European Commission since September 2002. From 1995 to 2002, he was DirectorGeneral...