Progress is being made toward the adoption of international financial reporting standards, according to a report published by the Committee of European Securities Regulators.

The report was produced by the CESR for the European Commission, which will be preparing a report of its own for the European Securities Committee and the European Parliament on the definition it will use to assess equivalence of third country generally accepted accounting principles and will also report on progress made by Canada, Japan and United States toward convergence with IFRS. That report is due April 1. The CESR’s report is intended to inform the commission’s report.

The CESR provides a description of the work timetable of the Canadian, Japanese and U.S. standard setters on the convergence between IFRS and the GAAPs of these countries. It notes that the Accounting Standards Board of Canada decided in January 2006 to move financial reporting for Canadian publicly accountable enterprises to IFRS, and the table on Canada outlines the steps to be followed until the changeover in 2011.

The committee says that the commission should, as soon as possible, publish the notion it will use when the determinations of equivalence are made by July 1, 2008. The CESR indicates that a determination that third country GAAPs are equivalent to IFRS must be based on the presumption that filters at country levels, audit assurance and enforcement on entity levels are sufficient for investors to rely on.

The report also notes that third-country issuers using third-country GAAP (other than Canadian, Japanese and U.S. GAAP) represent 5.8% of the total number of issuers having their securities admitted to trading on EU regulated markets. There are 28 versions of GAAP different from IFRS, Canadian, Japanese and U.S. GAAP. In terms of number of issuers, the Indian (around 70 issuers), Korean (around 30), Chinese (around 20) and Russian (around 14) GAAP are the most common “other GAAPs” on EU regulated markets.