The above Directive1 is based upon art. 54(3)(g) of the Treaty of Rome, and deals with accounting principles and the content, auditing and publication of the annual accounts of limited companies. The Directive will not merely be of interest to accountants, but will affect businessmen generally. When it is implemented, it should be easier for investors, creditors and suppliers to obtain, comprehend, and rely upon the accounts of companies in other Member States. Its impact in the Member States is likely to be considerable; the United Kingdom will be required to recast completely the law relating to company accounting in order to comply with its requirements, which are aimed at the harmonisation of the different standards which are operative in the various Member States. It is intended that this will be done by a comprehensive statement of the new accounting requirements in replacement of Sch. 8.2

Member States have been given two years in which to amend their national laws in order to conform with the requirements of the Directive.3 They may, however, stipulate that the national legislation shall not apply for a further 18 months.4 This period of time is extended to five years under certain circumstances. These include the case of unregistered companies in the U.K.5 and Ireland, and the situation in which other forms of layout of balance sheets and profit and loss accounts than those prescribed in the Directive have been brought into force by national legislation not more than three years before the notification of the Directive.

The Directive is divided into 12 sections. It does not attempt a completely rigid approach. It has been pointed out that there are over 60 points on which individual Member States may exercise a choice.6 They must, for example, choose whether to forbid, allow, or require companies to use inflation accounting in their annual accounts.7 The provisions of the Directive are of a detailed and complex character,