24 April 2008

Plenary Meeting 21-24 April

Parliament adopted the report on IFRS and and the governance of the IASB prepared by Alexander Radwan (EPP/DE). MEPs are calling for improvements to the governance of the International Accounting Standards Board and the International Accounting Standards Committee Foundation to address concerns that they may lack transparency and accountability since they are not under the control of any democratically elected parliament or government.

MEPs believe that there should be more representatives of a European background in the standard setting bodies. Parliament wants to see a public oversight body set up involving all IASCF/IASB public stakeholders, including legislators and supervisors, and a body representing market participants, which would deliver an annual report on the functioning of the IASCF/IASB.  Such a body could also be responsible for selecting and appointing trustees in a transparent manner with a geographically balanced representation of all stakeholders.

The report also urges IASB to carry out impact studies among all interested parties before adopting new accounting standards. As for the funding of the IASB, MEPs want to ensure that all user groups are adequately involved, that there is no conflict of interest between financiers and users and that access to the standards themselves is made universal.

The report says that the IASB’s proposed version of the IFRS for SMEs is far to complicated for most of them. While it might be a transitional option for larger SMEs hoping to expand, it should not be used for enforced harmonisation of SME accounting standards on this basis.

The report also emphasises that convergence with third-country accounting standards must be based on a prior assessment of the impact and merits of changes for EU companies and users of financial statements. It also calls for the “fair value” principle to be limited in scope, noting that it can be costly and lead to unrealistic valuations in some circumstances.

Adopted Text

© Graham Bishop