Opinion of the Economic and Social Committee on the 'Proposal for a Directive of the European Parliament and of the Council amending Directives 78/660/EEC and 83/349/EEC as regards the valuation rules for the annual and consolidated accounts of certain types of companies'
Date: 2000-07-12
Institutions: European Economic and Social Committee
Subjects: European accounting system, European undertaking, account, consolidated account, management accounting, standardised accounting system

19.9.2000

EN

Official Journal of the European Communities

C 268/1

II

(Preparatory Acts)

ECONOMIC AND SOCIAL COMMITTEE

Opinion of the Economic and Social Committee on the ‘Proposal for a Directive of the European
Parliament and of the Council amending Directives 78/660/EEC and 83/349/EEC as regards the
valuation rules for the annual and consolidated accounts of certain types of companies’

(2000/C 268/01)

On 15 March 2000, the Council decided to consult the Economic and Social Committee, under Article 44
of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for the Single Market, Production and Consumption, which was responsible for preparing
the Committee’s work on the subject, adopted its opinion on 7 June 2000. The rapporteur was Mr Byrne.

At its 374th plenary session (meeting of 12 July 2000), the Economic and Social Committee adopted the
following opinion by 84 votes to one with two abstentions.

1.

Introduction

1.1.
The Fourth Directive of 25 July 1978 harmonises the
content of annual accounts of limited liability companies
(excluding banks and insurance undertakings) and the Seventh
Directive co-ordinates the content of consolidated accounts.

instruments such as futures, options, forward contracts and
swaps to manage financial risks to which their businesses are
exposed from movements in variables such as interest rates,
currency rates or equity or commodity prices.

1.5.
The amendment will ensure that European companies
can participate in the capital markets on equal terms with their
non-European competitors.

1.2.
The purpose of the amendment is to maintain consist-
ency between the EU financial reporting framework and recent
developments in International Accounting Standards.

2. General Comments

1.3.
The amendment deals with the concept of fair value
accounting under which certain assets and liabilities be intro-
duced into the accounts of companies at cost and subsequently
remeasured to fair value at each balance sheet date. Fair value
is normally the current open market value.

The need for the amendment arises from the dynamic
1.4.
nature of international financial markets where it is now
common for the largest companies to use complex financial

The ESC supports the action of the Commission in
2.1.
proposing this amendment;
it is important that European
companies are not disadvantaged as against their foreign
competitors.

2.2.
The proposal would require Member States to permit
or require all or certain categories of companies to adopt fair
value accounting. The ESC agrees that the alternative approach
of allowing Member States an option is undesirable as it would
reduce comparability.

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Official Journal of the European Communities

19.9.2000

2.3.
The ESC also agrees with the format of the proposal
which leaves room for future developments; this is a dynamic
area and further variants are likely to arise. The proposal does
however clearly specify the balance sheet items which cannot
be valued at fair value.

2.4.
The ESC accepts that where fair value accounting is
adopted by a company it should apply to all derivative financial
instruments.

3.

Specific Comments

amendment largely only applies to the largest companies it
would not be onerous to require the amendment to apply to
annual accounts as well. This would seem more appropriate in
the context of the completion of the Single Market.

that

The ESC welcomes the fact

3.2.
the amendment
will not generally apply to SMEs which are often already
overburdened by regulatory requirements. However it does
suggest that in those very few cases where an SME is sufficiently
sophisticated to use these instruments (for example, new
technology companies) it should be required to account for
them in the appropriate manner.

3.1.
The ESC notes that it is intended that the Member
States have the option to limit the scope of the amendment
to consolidated accounts. The ESC suggests that since the

3.3.
The ESC also welcomes the intention of the Com-
mission to review the practical operation of the proposal
within three years of implementation and looks forward to
commenting on this review.

Brussels, 12 July 2000.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI