Transcript Deloitte template

EU FINANCIAL REPORTING
LATEST DEVELOPMENTS
NOFA
Francoise Flores, EFRAG TEG
31 Jan 2006
EFRAG Moscow 31 Jan 2006
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©2006 EFRAG
TOWER OF BABEL
JAPAN
US/FASB
GERMANY
SPAIN
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CANADA
IASB
AUS
UK
FRANCE
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CONVERGENCE
US/FASB CANADA
JAPAN
GERMANY
SPAIN
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AUS
IASB
FRANCE
UK
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CONVERGENCE
US/FASB
CANADA
JAPAN
GERMANY
SPAIN
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AUS
IASB
FRANCE
UK
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CONVERGENCE
US GAAP
IAS/IFRS GAAP
CONVERGENCE
GLOBAL GAAP
JAPAN
MORE DETAILED !
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EUROPE AND IFRS
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CONVERGENCE
EU POLICY: CONVERGENCE
A SUCCESS CRITERION FOR THE
EU COMMISSION
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CONVERGENCE
MAY UNDERMINE EUROPEAN
INFLUENCE
•Europe does not sit at the table
•Europe is split in its input
•Many players try to influence the IASB
•IASB is working closely with FASB
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EU
REGULATION
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REGULATION
• Financial Reporting Strategy of the Commission
• Objectives:
 Integrated financial market in Europe
 Harmonisation of financial reporting
 Reduce cost of capital
 Increase transparency and comparability
• Endorsement mechanism with two tiers
technical level (EFRAG) and political level (ARC)
Europe wishes to contribute to the development
of IFRS from the earliest stage possible
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REGULATION
Cornerstones
•EU companies listed on a regulated market, including
banks and insurance companies, to prepare
consolidated accounts in accordance with IAS/IFRS
•Option for Member States to extend to unlisted
companies and to the preparation of individual accounts
•SMEs not scoped in, but option provided to Member
States
IASB project for SMEs!
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REGULATION
Cornerstones
• Accounting Regulatory Committee (ARC)
• political level chaired by the Commission
• composed of representatives of Member States
• decide on endorsement on the basis of Commission proposals
• EFRAG
• Accounting technical committee
• Private-sector initiative (users, preparers, accountants, SS,…)
• endorsement advice to the Commission
• participate actively in the standard setting process
Accompanied by the Modernisation of the 4th and 7th
Accounting Directive
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REGULATION
Need for proper enforcement of IFRS
• high quality statutory audit
• strengthened co-ordination among European
securities regulators (CESR)
• establish equivalent, high level enforcement of
financial reporting throughout the EU
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REGULATION
Endorsed IFRS
Not endorsed
To be used
Not to be
used?
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EU - STRUCTURE
ACCOUNTING
REGULATORY
COMMITTEE -ARC
EU
Approval
EU COMMISSION
PARLIA
MENT
COUNCIL
OF
MINISTERS
Advice
EFRAG
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REGULATION
2m
1,5m
IASB
EFRAG
approval
advice
2m
EU
bureaus
+ 1m
EU Comm
+ ARC
endorses
Translate
EU review
EU-Parliament
+ C o Ministers
Endorsed
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EU ENDORSEMENT CRITERIA
TRUE AND FAIR VIEW
UNDERSTANDABLE, RELEVANT,
RELIABLE AND COMPARABLE
EUROPEAN PUBLIC GOOD
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EFRAG
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EFRAG Objectives
Has been assigned main objectives:
• Proactive contribution to the work of IASB and IFRIC:
Contribute to and influence IASB standard setting process BEFORE a
standard is issued
• Endorsement advice to the EU Commission:
Technical assessment of IFRS and IFRIC interpretation AFTER they are
issued
• Advise on changes to the EU Accounting Directives
• Forum to discuss and to coordinate with NSS
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EFRAG
ADDITIONAL OBJECTIVES:
•European coordination
•Stimulate thought leadership
•Challenge IASB
•Advising on EU Accounting Directives
Memorandum of Understanding with EU Commission
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EFRAG - STRUCTURE
SUPERVISORY BOARD
TECHNICAL EXPERT
GROUP - TEG
INSURANCE WG
SME JWG REV REC WG
FIWG
CONCESSION WG VENTURE CAP WG
EFRAG SECRETARIAT
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EFRAG Due process
IASB comment period 3 months
Max 2
months
ED
EFRAG
draft
letter
EFRAG
deadline
EFRAG
comment
letter
EFRAG working groups
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Founding Fathers
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Founding Fathers
• Business community/preparers : UNICE
• Accounting profession : FEE
• Credit sector associations : FBE, ESBG and GEBC
• Insurance : CEA
• SMEs : UEAPME and EFAA
• Stock exchanges : FESE
• Financial analysts : EFFAS
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EFRAG - Organisation
• Office in Brussels
• Permanent staff
– Full-time Chairman: Stig Enevoldsen
– Technical Director: Paul Ebling
– Assistant Technical Director: Reinhard Biebel
– 3 Project Managers
– Secretary
• Technical Experts Group (TEG)
• Working groups
• PAAinE – Pro-active Partnership Accounting in Europe
• Advisory Forum
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EFRAG Organisation - TEG
– Highly qualified people
– Time commitment 30%-50%
– Drawn from national standard setters, accountancy
profession, preparers and users
– Limited in size
– Accountable to the Supervisory Board
– Commission and CESR observer role
– Consultative Forum of Standard Setters
– Transparent work process – due process observed
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EFRAG Technical Expert Group (TEG)
VOTING MEMBERS AT TEG MEETINGS
•
•
•
•
•
•
•
•
•
•
•
Stig Enevoldsen, Chairman
Françoise Flores
Catherine Guttmann
Hans Leeuwerik
Ugo Marinelli
Thomas Naumann
Friedrich Spandl
Dominique Thouvenin
Mike Ashley
Thomas Seeberg
Mike Starkie
Denmark
France
France
The Netherlands
Italy
Germany
Austria
France
UK
Germany
UK
Auditor
Industry
Insurance Advisor
Industry
Auditor / Academic
Banker
Financial Analyst
Auditor
Auditor, Member of the UK ASB
Industry
Industry
NON VOTING MEMBERS AT TEG MEETINGS
Chairmen of large National Standard Setters:
•
•
•
Harald WiedmannGASB
Antoine Bracchi CNC
Ian Mackintosh ASB
NON VOTING OBSERVERS INVITED AT TEG MEETINGS
•
•
European Commission
CESR
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Consultative Forum of Standard Setters
• To bring European standard setters together to discuss
technical issues
• Standard setters directly related to IASB (France,
Germany and UK) and all other European Standard
Setters
• Meetings on a quarterly basis
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EFRAG – Working Groups
EFRAG has established working groups on:
• SME Joint Working Group
• Service Concession Arrangements
• Revenue Recognition
• Venture Capital Investments
• Insurance Accounting
• Financial Instruments
To come:
• Reporting Performance
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EFRAG
EFRAG DRAFTS FOR COMMENT NOW:
•Management Commentary
•Measurement Objectives
•ED 8 Operating Segments (soon)
STRONGER INPUT FROM
RUSSIA
We want your comments!
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PAAinE
Proactive Accounting
Activities in Europe
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PAAinE
Objectives:
•High quality proactive input to IASB(+FASB)
•Improve accounting in Europe
•Create debates in Europe
•More consistent messages to IASB
•Involvement in the convergence work
•Monitor work of IASB & FASB
•Thought leadership
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PAAinE
Revenue Recognition
Conceptual Framework
Pensions
Equity/Liability split
Performance Reporting
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PAAinE
EFRAG
SWEDEN
GERMANY
Influence!
SPAIN
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POLAND
HOLLAND
FRANCE
UK
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Consistent application
Big issue in Europe
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CONSISTENT APPLICATION
EC
US SEC
ROADMAP
Reconciliation
Reconciliation
Reconcilation
Work
programme
Work
prog
Work
prog
IASB
FASB
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Roadmap
CONSISTENT APPLICATION
Accounting standards
Agree work programme
Implementation / application
Use of implicit options
Interpretations
Enforcement
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Interpretations
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INTERPRETATIONS
PERCEIVED NEED IN EUROPE
•IS THERE REALLY A NEED?
HOW DO WE SOLVE IT, IF
THERE IS A NEED?
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INTERPRETATIONS
PRINCIPLES RULE
BASED
BASED
NOT
HIGH LEVEL FLEXIBILITY
????
APPLICABLE
STANDARDS
DETAILED
NOT
CONSISTENT
STANDARDS APPLICABLE
????
INTERPRETATIONS?
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Interpretation
Support
Mechanism
Should a mechanism be
established for Europe?
A Forum?
A Roundtable?
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Forum-Roundtable
Discussion:
•Is there a need?
•Should a structure be established?
•Should it just be a discussion Forum?
•Should it be lead by – NSS? – EC? – CESR?
•Resources needed?
EU Commission proposal...
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INTERPRETATION SUPPORT
IFRIC
CESR
EU COORDINATOR
”FORUM”
NIC
NIC UK
NIC
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NIC D
NIC DK
NIC
NIC F
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IASB WORK PROGRAM
MANY
PROJECTS
MANY
CHANGES
IASB has addressed a number of issues also in the European
interest:
•IFRS 1 First time adoption
•Improvements project
•Fair Value Option
•IFRIC 2
•Convergence
•…
A lot has been achieved and EFRAG wants to continue good
cooperation with IASB!
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ENDORSEMENT
Europe has endorsed all existing and new IFRSs
Except for:
•IAS 39 carve outs (one carve-out still remaining)
•IFRIC 3 Emission Rights (withdrawn by the IASB)
EFRAG recommends endorsement on pure technical
grounds
•Fully independent from particular interest
•EU Commission takes EFRAG views into consideration
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WWW.
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EFRAG.ORG
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©2006 EFRAG
THANK YOU
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©2006 EFRAG