U.S., E.U. Agree to Recognize Each Other's Accounting Rules

U.S. and European Union regulators agreed to recognize each other's rules for reporting corporate financial data by 2009, a move that may increase international investing and reduce corporate compliance costs.

European companies using international accounting standards now must reconcile financial data with U.S. rules if their shares are listed on New York exchanges. Securities and Exchange Commission Chairman Christopher Cox and Charlie McCreevy, the E.U.'s internal market and Services commissioner, said yesterday that they want to eliminate that requirement.

"We are committed to this process, and we are not looking back," Cox said in a speech in Washington, accompanied by McCreevy. "Benefits include increased investor access to foreign-investment opportunities and entry into U.S. capital markets by issuers that might otherwise be deterred from listing here because of the costs."

U.S. regulators are increasing cooperation with their European counterparts to police companies, exchanges, hedge funds and private-equity groups.

McGreevy and Mark W. Olson, chairman of the U.S. Public Company Accounting Oversight Board, agreed separately yesterday that accounting regulators will seek "full reliance" on each other's work within two years.

European and U.S. 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 agreement with Olson follows complaints from European auditing firms about U.S. inspections.

Mutual recognition could reduce regulation on the auditors of hundreds of companies with transatlantic stock listings, such as General Electric, General Motors and Royal Dutch Shell.