29 September 2014

ACCA: Evaluating the impact of IFRS in the EU

ACCA has responded to stakeholders´ discussion at the EP on the impact of global accounting standards in Europe, covering the quality of IFRS, their costs and benefits, enforcement and whether there should be changes to the IAS Regulation.

Since 2005, Regulation 1606/2002 (the so-called IAS Regulation) requires all listed companies to prepare their consolidated financial statements according to IFRS, which are now used by companies in more than 100 countries. Following the financial crisis, IFRS have been increasingly scrutinised at international and EU levels, and in 2013, Philippe Maystadt, Special Adviser to Commissioner Barnier, reviewed the governance of EU bodies in this field.  The EC is now complementing this exercise by evaluating the IAS Regulation, and in August launched a public consultation on the impact of IFRS in the EU. 

To raise further awareness on this process, ACCA recently organised a high level conference at the EP in order to both present and discuss the consultation, which closes at the end of October.

Discussions revolved around the six main themes in the consultation – the quality of IFRS; their costs and benefits in Europe; their enforcement and whether there should be changes to the Regulation. 

The discussion at the conference noted that, though capable of improvement in a number of respects, IFRS were generally meeting their objectives in terms of capital markets. Richard Martin, Head of Corporate Reporting at ACCA, who chaired the expert panel at the conference, said: 'Important changes to IFRS in the pipeline - including IFRS 9 the new standard on financial instruments - were noted as moving in the right direction.' 

He also noted: 'Though the panel found it difficult to isolate and quantify the incremental running costs of IFRS, they all agreed that there had been much greater benefits in terms of a single language of accounting in Europe and the costs of capital for listed companies.'

On enforcement, speakers thought that the use of IFRS had a positive impact on the consistency of the application of the standards across the EU and on the quality of national enforcement. Some stressed, however, that if IFRS is a common language there remain some national/regional dialects, which in some cases, run the risk of creating an uneven playing field.  There was also a call for improvements in the field of coordination from ESMA (European Securities and Markets Authority). 

On the final two issues, Richard Martin noted,  'The conference did not identify significant reasons to change the Regulation, either in terms of the scope of its application or the criteria used in the endorsement process. The Commission noted that they were reporting on the evaluation of the Regulation and not committed at this point to new legislative change.' 

Press release

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