1. Financial Reporting Policy
IFRS in the EU
Task Force IPSAS
Second meeting, 26 April 2012
Liliana Zugo
Financial Reporting Policy
DG MARKT

2. Outline of presentation
The EU approach in an international context
Consistent use of IFRS in the EU and worldwide
The EU experience: endorsement process and lessons learned
The role of the different institutions

3. The EU approach in an international context
The EU supports worldwide use of IFRS:
Several regulatory dialogues and technical assistance mechanisms already in place - special focus on Accession Candidates and Neighbourhood Policy Countries
Constant dialogue with countries already recognised as equivalent (USA, Japan)
Equivalence decisions due by 31st December 2011 for China, India, South Korea, Canada

4. The EU approach in an international context
IFRS has speeded up accounting reforms in other jurisdictions
Most conceptual work in accounting strongly influenced by work in the IASB
Challenge: make accounting solutions work in jurisdictions with different legal traditions

5. Consistent application of IFRS
Transparency and comparability of financial information are very important to maintain trust and confidence in financial markets
General view that consistency of IFRSs application in the EU has been improved
IFRSs have been the driving motor towards comparability of financial information accross Europe
But … still room for improvement

6. Consistent application of IFRS
Risk …:
Due to the different approaches to adopt IFRSs (EU endorsement, transposition into national GAAPs…)
Exacerbated by:
IFRSs are principle-based standards => enforcers as safeguards to abusive interpretations

7. The EU experience - The endorsement process
IASB
European
Commission
European
Parliament
EFRAG
Council
ARC
Accounting
Regulatory
Committee
Interest groups

8. The IAS Regulation
Regulation 1606/2002: From 2005 all listed companies in the EU use IFRS for hteir consolidated accounts
Options for Member States
Endorsement criteria
No additions or modifications to the standards

9. Comitology Procedure with Scrutiny
1. IASB issues a standard
2. EFRAG holds consultations
3. EFRAG's endorsement advice + effect study
4. Commission draft endorsement Regulation (translations)
5. Accounting Regulatory Committee vote
6. European Parliament and Council scrutiny period
7. Commission adoption and publication in the OJ
Approximately 8 months

10. The EU experience - Lessons learned
Impact assessments/Effect Studies
Commission has agreed with Parliament to do Effect Studies for all standards and interpretations
Collaboration Commission – EFRAG
As early as possible in the standard-setting process
Strong field testing ex-ante

11. The role of the institutions
Enforcement
Interpretation
Regulation n°1095/2010
IFRIC
European Union
ESMA
Regulation n°1606/2002
EU endorsement
IFRICs endorsement
National market regulator
National market regulator
National market regulator
National market regulator
EFRAG advice

12. The role of the institutions
The IASB:
Standard setter
Request from stakeholders for ex-ante field-testing and post-implementation reviews (EC letter to IASB agenda consultation)
IFRIC:
Interpretation committee (higher level of activity expected)

13. The role of the institutions
ESMA:
Coordinating consistent application and enforcement of IFRS in the EU
But the ultimate responsibility for the enforcement of IFRS financial statements rests with the national competent authorities
According to Regulation 1095/2010, ESMA to provide guidelines, recommendations and opinions on how to apply the existing IFRS standards
EFRAG:
Provides technical advice to the European Commission (endorsement of IFRSs / IFRICs, …)

14. (32-2) 296.13.56  (32-2) 292 17 49  liliana.zugo@ec.europa.eu
Contact
Liliana Zugo
Financial Reporting
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