CESR publishes today its advice to the European Commission “CESR’s advice on Canadian and South Korean GAAPs” (Ref. CESR/08-293).
The Commission Regulation (EC) No 1569/2007 “Regulation establishing a mechanism for the determination of equivalence of accounting standards applied by third country issuers of securities pursuant to Directives 2003/71/EC and 2004/109/EC of the European Parliament” (“the Regulation on the mechanism”) published on 18 December 2007, lays down the conditions under which the GAAP of a third country may be considered equivalent to IFRS adopted pursuant to EC Regulation 1606/2002 in accordance with a definition of equivalence set out in Article 2. The Regulation also sets out in Article 4 the conditions for the acceptance of third country accounting standards that are the subject of an appropriate convergence or adoption programme for a limited period expiring no later than 31st December 2011 (see notes for editors).
On the basis of this Regulation, CESR received a mandate from the European Commission in March 2008 requesting CESR’s technical advice on Canadian, Indian and South Korean GAAP. In accordance with this mandate, CESR provides, in this advice, details of its work and conclusions concerning Canadian and South Korean GAAP. CESR does not make any proposals in this advice regarding Indian GAAP as it is still in the process of obtaining information about the situation regarding the use of IFRS in that country.
CESR’s advice was subject to consultation with market participants, and the comments raised by respondents are included, within CESR’s final technical advice, rather than in a separate feedback statement on this occasion. The responses to the consultation are available on CESR website in the section “Consultation”.
CESR’s recommendations in the technical advice are the following:
CESR recommends the Commission accept Canadian GAAP according to article 4 of the Commission Regulation on the mechanism for determining equivalence of third country GAAP. On the basis of the analysis undertaken, CESR believes it can draw the following conclusions:
- The Canadian AcSB has made a public commitment in January 2006 to adopt International Financial Reporting Standards (IFRS) by 31 December 2011 and there is publicly available information giving details of both the program and the progress the Canadian Authorities are making to achieve it;
- Effective measures are being taken to secure a timely and complete transition to IFRS by that date as indicated in the timetable provided in paragraph 31;
- The Canadian authorities are showing a commitment to the adoption program and all stakeholders (companies, auditors, academics, the securities regulators, the IASB, etc.) are involved in the process.
CESR recommends the Commission accepts South Korean GAAP according to article 4 of the Commission Regulation on the mechanism for determining equivalence of third country GAAP. On the basis of the analysis undertaken, CESR believes it can draw the following conclusions:
- The South Korean Financial Supervisory Commission (KFSC) and the Korea Accounting Institute (KAI) have made a public commitment in March 2007 to adopt IFRS by 31 December 2011 and there is publicly available information giving details of both the programme and the progress the South Korean Authorities are making to achieve it;
- Effective measures are being taken to secure the timely and complete transition to International Financial Reporting Standards by that date as indicated in the timetable provided in paragraph 53;
- The South Korean authorities are showing a commitment to the adoption program and all stakeholders (companies, auditors, academics, the securities regulators, the IASB, etc.) are involved in the process.