Slavin, 1996; Samuelson and Nordhaus, 1992) of its member states in the global economy as it hastens its economic integration (Graetz, et. al, 2006; Halkos and Salamouris, 2003, European Economic Integration, 1994).The Enron scandal cannot be separated from the failure of the US generally accepted accounting principles (GAAP) on financial reporting (Choi and Fisch, 2003) that became the basis for the European Union (EU) members to be unable to find their trust on said accounting rules and conventions. Persuading the US to change its GAAP with the IAS due to ineffectiveness of the former in the Enron scandal is part of the process. With European Commission having urged the SEC to adopt IAS in February 2002, an overwhelming adoption of the IAS by European Parliament in March 13, 2002 was evident by a vote of 492 for, 5 against and 29 abstentions. The European Parliament endorsed the Commission’s proposal for all EU listed companies to follow standards issued by the International Accounting Standards Board in their consolidated financial statements not latter than 2005. Non-listed companies on the other hand were permitted to decide whether to adopt IAS. Member States were also given the option to exempt some companies temporarily from IAS requirement under some cases until 2007. The option is only available in the case listed companies in the EU and in on a non-EU exchange and are following another set of internationally accepted standards and in the case of companies that have only publicly traded debt securities (Deloitte Touche Tohmatsu, 2008e). Consistent Application of International Accounting Standards on European Companies.
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