US and European regulators pledged by 2009 to recognize each other's rules for how companies report financial data, a move that may increase international investing while reducing corporate compliance costs.
European companies using international accounting standards must currently reconcile financial data with US rules if their shares also list on New York exchanges. US Securities and Exchange Commission Chairman Christopher Cox and European Union Financial Services Commissioner Charlie McCreevy yesterday said they want to eliminate the requirement. „We are committed to this process and we are not looking back,” Cox, accompanied by McCreevy, said during a speech in Washington yesterday. „Benefits include increased investor access to foreign-investment opportunities and entry into US capital markets by issuers that might otherwise be deterred from listing here because of the costs.” US regulators are increasing cooperation with their European counterparts to police companies, exchanges, hedge funds and private-equity groups. McGreevy and Mark Olson, head of the US board that oversees auditors, separately agreed yesterday that accounting regulators will seek „full reliance” on each other's work within two years. „Global markets need global standards and global regulatory cooperation,” McCreevy said. „This is the only way to ensure proper investor protection and to promote transparency and efficiency.”
European and US regulators will eliminate „costly reconciliation” requirements by recognizing each other's financial-reporting standards, which will trigger global economic growth, McCreevy said. He and Cox are following through with a plan announced by the SEC in 2005. McCreevy's accord with Olson, chairman of the Public Company Accounting Oversight Board, follows complaints from European auditing firms about US inspections. Mutual recognition could reduce regulation on the auditors of hundreds of companies with trans-Atlantic stock listings, such as General Electric Co., General Motors Corp. and Royal Dutch Shell Plc. (Bloomberg)