Recent and Ongoing Activities in Financial Reporting in …siteresources.worldbank.org/EXTCENFINREPREF/Resources/4152117... · Recent and Ongoing Activities in Financial Reporting

Recent and Ongoing Activities in

Financial Reporting in the EU

World Bank CFFR REPARIS Senior Officials’ Workshop 4 June 2014 Vienna

What is EFRAG today?

• An independent private organisation created 13 years ago to assist the EU IFRS policy

• Serving the European public interest

• Acknowledged as independent technical advisor to the European Commission

• Participation of all European stakeholders, with NSS playing a prominent role

• Funded 50 % privately, 50% by the EC

World Bank CFRR Reparis Senior Officials' Workshop 4 June 2014 Vienna

EFRAG’s main objectives today

• Ensuring full participation of European stakeholders in the technical debate supporting the development of IFRS and expressing the technical European view throughout the IASB standard setting process;

• Engaging European stakeholders in the analysis of and debate on emerging financial reporting issues by coordinating and carrying out proactive accounting activities;

• Providing endorsement advice to the EC on the acceptability of IFRS in Europe

• Advising the EC and organising for changes to the Accounting Directive and related topics


Maystadt reform: the new EFRAG


Europe’s reform in 2013

• Initiated by the EC in 2012, involvement of the ECOFIN and the EP

• Final Maystadt report October 2013: Should IFRS be more «European »?

• Objectives: – To ensure that European views are presented in a

coherent, convincing and timely manner

– To make IFRS accepted by European constituents, i.e. have them endorsed

– To test whether change is needed in the European endorsement process

• Finance Regulation


Main recommendations in the Maystadt report

• Confirm EU IFRS policy

• Retain the current endorsement process, standard by

standard, on an adopt or reject basis

• Formalise that IFRS should not hinder economic growth or

financial stability, should be prudent

• Transform EFRAG to widen its mandate and make it a fully

representative all inclusive institution (private stakeholders,

national standard setters, european regulators)

• Adopt a consensus based decision making process for

EFRAG

• Improve interaction of EFRAG with the ARC and the EP



After the Maystadt reform

True and fair view principle

EFRAG Board Determines all EFRAG positions

The European Commission assisted by

European public good Financial stability Economic growth EFRAG TECHNICAL EXPERT

GROUP: Provides technical advice to

the EFRAG Board

EFRAG TECHNICAL STAFF

Field work

Field work

IASB

Implementation Maystadt reform

EFRAG General Assembly 16 June 2014:

• Approval revised EFRAG Statutes and EFRAG Internal Rules (effective from The Effective Date)

• Admission new members (including NFMs)

• Transitional arrangements

• Effective Date: Date of appointment of the President of the EFRAG Board

• New governance structure operational from The Effective Date


Europe’s influence


Europe is influent

• When we were not, nobody was

• Convergence program initiated in 2006 with the approval of the European Commission

• Changes in governance and due process as promoted by the EC and EFRAG

• Positive outcomes in many technical projects

• Agenda setting and evolutions in due process follow EFRAG’s recommendations

• EFRAG and NSS joint efforts in research activities are sucessful


EFRAG has gained technical credibility and

international visibility

• Our due process work: – (Draft) comment letters

– Outreach activities: public hearings

– Field tests, workshops, effect studies

– Field work policy

– Feedback statements

• Endorsement advice and endorsement schedule

• Discussion papers on up-stream projects

– Feedback statements

– Outreach activities

• Participation in international fora of National Accounting Standards Bodies


EFRAG’s field work policy

• Effect studies/Field tests = IFRS quality control

– Intended outcomes

– Clarity of requirements

– Operationality

• EFRAG (and NSS) should be participants in an IASB quality control process

• EFRAG has taken the initiative to ensure proper quality control for Europe


EFRAG’s activities


EFRAG Current activities

• Input to Post Implementation Review IFRS 3, Business Combinations: survey and outreaches

• DCL Macro Hedging Discussion Paper

• Short paper series

• Leases project

• Insurance project

Upcoming for the new Board:

• Endorsement advice IFRS 9 Financial Instruments

• Endorsement advice IFRS 15 Revenue Recognition

• DCL Discussion Paper Rate Regulated Activities


Since 2010, research work…

• Publication of discussion papers/feedback statements:

– Understanding the effects of accounting standards

– Business Combinations under Common Control

– Improving Financial Reporting of Income Tax

Disclosure Framework for the Notes

– Conceptual Framework bulletins

– The role of the business model in financial

statements

– The use of information by capital providers

(academic literature review)

• Under development: Separate financial statements


Bulletins (with National Standard Setters of

France, Germany, Italy and the UK):

Published:

• The role of a Conceptual Framework

• Accountability and the objective of financial reporting

• Complexity

• Uncertainty

• Prudence

• Reliability of financial information

• Prudence

• The asset/liability approach

• The role of a business model in financial reporting

• Uncertainty

EFRAG Conceptual Framework related

activities

• Future Bulletins:

– Cash flow statements.

– …

• EFRAG paper on debt/equity.

• Draft comment letter and comment letter.

• Outreach events.

• ASAF member (position discussed with

EFRAG CFSS).


Endorsing IFRS in the EU:

role EFRAG


In the consultation process…

• EFRAG tends to – Always formulate its preferred view

– Provide recommendations also in case it would not be listened

to

– Comment on all proposals

– Give more emphasis to issues that need to be addressed

• EFRAG is seeking: – As extensive a debate as possible

– Final standards which are going to be acceptable to European

constituents (in technical terms)


Doing so does not mean that solutions proposed are necessarily poor

In the endorsement process…

• EFRAG assesses the IFRS as published by the IASB:

Against the criteria in the IAS Regulation

• The 2002 IAS Regulation provides:

• True and fair view principle met

• Amendments are not contrary to the European public good

• Maystadt recommendations

• EC Evaluation of the IAS Regulation in process



After the Maystadt reform

True and fair view principle Conducive to the European public good

The European Commission assisted by

An accounting Regulatory Committee

Provides advice on both technical and economical aspects

An accounting technical Committee

EFRAG Endorsement schedule


How to be involved in

EFRAG


How can your country be involved?

• Attending as audience the EFRAG public meetings

• Participating in quarterly EFRAG Consultative Forum of Standard Setters meetings

• Participating as observer in EFRAG outreach events or organising joint outreach events with EFRAG

• Submitting comments on the EFRAG Draft Comment letters and EFRAG Discussion Papers


How can your country be involved?

• Submitting candidates for:

– EFRAG TEG

– Working Groups

– Advisory Panels

• Organise a National Funding Mechanism

• Seconding staff to EFRAG


How to stay informed?

• Visiting our website: www.efrag.org

• Subscribing to our news items and get

automatic warnings of all news items

posted


http://www.efrag.org/

EFRAG receives financial support of the European Union-DG Internal Market and Services.

The contents of this presentation is the sole responsibility of EFRAG and can under no circumstances be

regarded as reflecting the position of the European Union.

Thank you for your attention!

www.efrag.org

And now…

Questions?…and answers!


Documents

Recent and Ongoing Activities in Financial Reporting in …siteresources.worldbank.org/EXTCENFINREPREF/Resources/4152117... · Recent and Ongoing Activities in Financial Reporting