EN Official Journal of the European Union CE 78/80

(2004/C 78 E/0079)

WRITTEN QUESTION E-2127/03

by Bart Staes (Verts/ALE) to the Commission

(25 June 2003)

Subject: Guarantees as to the correctness of businesses' financial information

The Flemish newspaper De Standaard reported on 13 June 2003 that a majority (three quarters) of financial directors have doubts about the accuracy and quality of the available financial information concerning their business. These findings come from a study by a French business specialising in financial reporting software and are based on information supplied by 150 financial directors of large international companies.

Is the Commission aware of this alarming finding and, bearing in mind that several major business scandals have occurred recently, will it:

(a) check these data, and

(b) take measures to guarantee that such companies' employees, investors and customers (i.e. society) receive accurate financial information?

If so, what steps will the Commission take to this end?

If not, why will the Commission not take any action on the findings of this study?

Answer given by Mr Bolkestein on behalf of the Commission

(6 August 2003)

(a) The Commission was not aware of this specific study by a French company specialising in financial reporting software. It will however, assess this study. The survey results, if correct, are indeed of concern, and also surprising. Surprising because financial directors of large international companies from the Union normally sign-off for the accuracy of the financial statements as a member of the board of directors.

(b) Back in 1999 when the Commission proposed the International Accounting Standards (IAS) financial reporting strategy, the Commission emphasised that Europe needs strong and consistent enforcement of IAS. Enron and other scandals have confirmed the importance that the Commission attached to enforcement of financial reporting standards. The Commission is working on high quality IAS enforcement on different fronts with European national securities regulators through the Committee of European Securities Regulators (CESR) network, the action plan on company law and corporate governance as well as through improving the audit function in the Union.

The following measures have been proposed or adopted to ensure accurate financial reporting:

— CESR adopted in April 2003 its first standard on Financial Information: ‘Enforcement of standards on financial information in Europe’. This standard represents a significant contribution to the task of developing and implementing a common approach to the enforcement of International Accounting Standards in Europe.

— The Commission's action plan on ‘Modernising Company Law and Enhancing Corporate Governance in the European Union’ (1) (issued on 21 May 2003) called, amongst many other actions, for a legislative measure to confirm at Union level the collective responsibility of board members for financial statements as a short term priority.

— The Commission outlined in its Communication ‘Reinforcing the statutory audit in the EU’ (2), of 21 May 2003 a series of actions aimed at further improving statutory audit quality in the Union. Important short term priorities will be the modernisation of Union legislation on auditing (the 8th Company Law Directive (3)), strengthening public oversight and the use of International Standards on Auditing from 2005 onwards.

These actions demonstrate that the Commission is strongly committed to ensuring proper financial reporting which is a crucial to protect the interests of shareholders, creditors, employees and other stakeholders.

(1) COM(2003) 284 final.

(2) COM(2003) 286 final.

(3) Eighth Council Directive 84/253/EEC of 10 April 1984 based on Article 54 (3)(g) of theTreaty on the approval of persons responsible for carrying out the statutory audits of accounting documents, OJ L 126, 12.5.1984.