The European Commission said it would propose a law allowing U.S. and Japanese companies with listings on European exchanges to file financial statements in accordance with U.S. generally accepted accounting principles without first reconciling them with International Financial Reporting Standards.

The move essentially makes IFRS equivalent with U.S. and Japanese GAAP, and removes a reconciliation requirement that was scheduled to go into effect in 2009. Last year, the U.S. Securities and Exchange Commission removed the reconciliation requirement for companies that report results in accordance with IFRS.

The commission also said it would propose legislation that would give Canada and South Korea an exemption to the reconciliation requirement as both nations are transitioning to IFRS by 2011.

The European Commission will also extend IFRS equivalence to China's accounting standards for business enterprises in 2009 after communicating with Chinese authorities and receiving assurances that they will resolve some outstanding issues that had prompted the Committee for European Securities Regulators to ask for a delay, according to BNA's Daily Tax Report.

In removing the reconciliation requirement for U.S. companies, the European Commission cited the work of the Financial Accounting Standards Board on convergence of U.S. GAAP with IFRS, and the two boards' plans for collaborating on future standards and interpretations.

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