Brussels, 29/04/2008 (Agence Europe) - In a report adopted on Thursday 24 April, the European Commission says that the first year of compulsory application of International Financial Reporting Standards in the EU “has been generally positive, even if the regulatory changes and lack of experience have posed a challenge for first-time appliers”.
From 1 January 2005, the International Accounting Standards (IAS) regulation required European companies whose securities are admitted to trading on a regulated market in the EU to prepare their consolidated accounts in line with IAS/IFRS and SIC/IFRIC issued by the International Accounting Standards Board (IASB) and endorsed by the EU. Member states may permit or require this accounting framework to be applied to the consolidated accounts of companies whose securities are not admitted to trading on a regulated market in the EU and/or to annual (individual) accounts regardless of whether the company is admitted to trading on a regulated market in the EU.
In its report, the Commission notes that the value of the accounting information supplied had increased and IFRS had generally been applied consistently in the EU. It said that “the level of consistency between IFRS accounts is likely to increase over time as preparers and auditors gain experience with applying the new accounting framework”.
The Commission says that the EU endorsement process per se ensured technical quality, political legitimacy and relevance to business. It states that “the system has been working well and standards have been endorsed in good time” and that “the endorsement system is flexible and has already been amended - inclusion of SARG (Standards Advice Review Group), new working methods in EFRAG (European Financial Reporting Advisory Group), new rules on committee procedures, effect studies, etc.”. The net result, it concludes, was an efficient and legitimate structure.
To maintain the high acceptance of IFRS in the EU, the Commission believes it important that stakeholders feel that the work programme of the IASB address the right issues and that future standards/interpretations provide suitable accounting solutions. Some stakeholders have expressed doubts about some of the accounting projects currently being prepared by the IASB. The Commission says, therefore, that it is crucial that EU institutions, member states and stakeholders become involved in the standard-setting process as early as possible, as this enhances the quality of the work and increases the legitimacy and acceptance of future standards/interpretations. Furthermore, the way the IASB undertakes impact assessment in future will also be monitored carefully, the report says.
In order to ensure the overall quality of future IFRS and IFRIC, the Commission says it is also important that the IASB/IASCF (International Accounting Standards Committee Foundation, the parent body of the IASB) has suitable governance structure and secure funding. Commission services regularly assess the governance and funding of the IASB/IASCF and publish reports that can be downloaded from the Commission website:
http: //ec.europe.eu/internal_market/accounting/ias_en.htm#070112.
The text of the 24 April report is available at:
http: //eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM: 2008: 0215: FIN: EN: PDF (O.L.)