ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (79)423
Vol.1979/0150

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(79)423 final.
Brussels.24July1979
Recommendation fora
COUNCIL DECISION
concerning theCommunitypositiontobeadoptedindiscussions on
thedevelopment ofinternational accounting andreportingstandards
withintheUnitedNationsOrganization
">«•i>?.
>J .;.->
.■■-:) \n U-.J //V
(submittedtotheCouncilbytheCommission )
/
COM(79)423final.

Exp1anatory_r-ferrK'yrandum
1,TheEconomicandSocialCouncil(ECC-SOC)of\-h&UnitedNationsOrganization
(UNO)adoptedaresolutionon11May1979settingupas;ecialinter-
governemritcil workingparty,ItstermsOLreferenceconcernthedevelop­
mentofinternational accountingandreportingstandards.Thev-crking
partywillccsnrnenceworkintheAutumnof1979inGeneva.In1380,it
istoreporttotheCommitteeonMultinational Enterprises onthemeasures
tobeadoptedinthefieldofinternational accountingandreporting
standardsparticularly inrelationtotheproposedinformation system
andcodeofconduct.
2.OnthebasisofArticle54(2)and(3)(g)oftheEECTreaty,theCouncil
adoptedthe(First.)Directiveof9March1968(68/151/EEC)^"^whichis
concernedinteralia,withthedisclosureofthebalancesheetoflimited
companies.InaccordancewithArticle2(1)(f)ofthatdirective ,the
MemberStateshaveadoptedthemeasuresnecessarytoensurethatthe
compulsorydisclosurebycompaniescoversthebalancesheetandprofit
aridlossaccountsoflimitedcompanies .Inthecaseofsocietesa
responsabilite limiteetheapplication ofthisprinciplewaspostponed
untilthedateofimplementation ofadirectiveonthecoordination of
thecontentsofbalancesheetsandprofitandlossaccounts.
Thj.s,thefourthdirective ,ontheannualaccountsofcertainc.ipanies,
2wasadoptedbytrieCouncilon25July1978~.Itestablishes "legal
frameworkforaccountingstandardsintheCommunity.Therearmore
thanfiftyarticlescomprisingdetailedprovisions onthestricture
ofbalancesheets,profit ,andlossaccounts,rulesofvaluation,the
contentoftheannextoannualaccountsanddisclosure ,tomearticles
dealwiththeproblemsoftheannualaccountsofaccsn;anyichhas
linkswithothercompaniesinagroup.
1)OJL65of14March1968,p.8.
2)CJL222of14August1978,p.11.

-2-
Therecitals tothefourth directive stress that where acompany belongs
toagroup ,only thepresentation oftheconsolidated accounts ofthe
group cangive afaithful andcomprehensive picture oftheposition ofthe
undertakings inquestion „For this reason theCommission hasproposed a
seventh directive ,concerning group accounts ^.Thisproposal isfounded
onthesame legal basis asthefourth directive anddeals with the
specific problems oftheannual accounts ofgroups -The twoinstruments
aretherefore closely linked ,
3„Cnthebasis ofArticle 75oftheEECTreaty ,theCouncil adopted
Regulation (EEC )2830/77of12December 1977 onthemeasures necessary to
achieve comparability between theaccounting systems andannual accounts
2ofrailway undertakings .Asisshown byArticle 2ofthat regulation ,
some ofthese undertakings areorgani zed ascompanies .
4.According tothedecisions oftheCourt ofJustice (judgment of31March
1971 intheAETR case 22/70)theeffect ofallthedecisions thus adopted
atCommunity level inrespect oftheannual accounts ofcertain companies
istoempower theCommunity alone toenter into commitments with non-member
countries cnthese subjects .Inview ofthefact that the Gcanmunity pro­
visions referred toabove and the discussions undertaken within the UNO
have thesame object ,theCommunity assuch should take part inthe
discussions andaccept ,where necessary ,anyagreements orarrangements
arising frcsn them ,whatever form these may take .
J
Community provisions concerning standards should ,notbeprejudiced by
instruments drawn upwithin theUNO .This applies totheprovisions of
thefourth directive but also ,inview oftheclose links between the
latter andtheamended proposal foraseventh directive ,tothesubject
matter ofthat proposal .
1)OJC14/2of17January 1979 ,p.2.
2)CUL334of24December 1977 ,p.13.

TheIM)recommenda kions oragreements oninternet }onax accounting and
reporting standards could directly affect thecontent ofthefourt
directive .
J
Similarly ,Council Regulation (EEC )2830/77should notbeprejudiced
byUNOinstruments .
The Commission therefore recommends the Council totake the attached
decision concerning theCommunity position tobeadopted inthediscus­
sions onthedevelopment ofinternational accounting andreporting
standards within the UNO .

Recommendation for a
COUNCIL DECISION
I
concerning theCommunity position tobeadopted indiscussions onthe
development ofinternational accounting andreporting standards within
theUnited Nations Organization .
THE COUNCIL OFTHE EUROPEAN (IMMUNITIES'
Having regard totheTreaty establishing theEuropean Economic Community ,
Having regard totherecommendation bytheCommission ,
Whereas adecision should betaken ontheCommunity position tobeadopted
inthediscussions onthedevelopment ofinternational accounting and
reporting standards within thethited Nations Organization
/
HAS DECIDED ASFOLLOWS :
Sole Article
1.During thediscussions ofthespecial working party oftheUnited
Nations Organization onthedevelopment ofinternational -accounting and
reporting standards ,setupbytheEconomic andSocial Council on11May
1979 ,theCommission shall express theCommunity position insofar as
these discussions relate tosiibjects covered bycommon rules .
TheCommission shall actinconsultation with therepresentatives of
the Member States .
2.TheCommission shall ensure that theproposals forgreater harmonization
ofcompany lawwhich ithassubmitted totheCouncil arepresented in
such awayduring thediscussions oftheworking party referred toin
paragraph 1that they clearly show theimportance V/hich theCommunity
attaches tosuch harmonization .

2
3.TheMember States andtheCommission shall coordinate their positions
with aview toreaching acommon position inthemeetings oftheworking
party referred toinparagraph 1,inparticular onthedesirability of
action bytheUnited Nations Organizations inthefield ofaccounting
standards . 'Ij
«
For the Council .
The President
Done atBrussels .