11 June 2013

Sharon Bowles MEP: Union programme to support specific activities in the field of financial reporting and auditing for the period 2014-20

Proposal for a regulation

Recital 4

Text proposed by the Commission

(4) According to Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards, IFRS should be incorporated into Union law to be applied by companies with securities listed on a regulated market in the Union, provided that the IFRS meet the criteria set out in that regulation. IFRS therefore play a major role in the functioning of the internal market and thus the Union has a direct interest in ensuring that the process through which IFRS are developed and approved delivers standards that are consistent with the requirements of the legal framework of the internal market.

Amendment

(4) According to Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards, IFRS should only be incorporated into Union law to be applied by companies with securities listed on a regulated market in the Union, provided that the IFRS meet the criteria set out in that regulation and the requirements of the 4th and 7th directives. IFRS therefore play a major role in the functioning of the internal market and thus the Union has a direct interest in ensuring that the process through which IFRS are developed and approved delivers standards that are consistent with the requirements of the legal framework of the internal market. It should be noted that the IAS Regulation uses the conceptual framework from 2001 which has now been changed in several significant manners, particularly around the word 'prudence', which includes not booking unrealised profits, and stewardship, which includes the capital maintenance function of accounts.

Amendment 12

Proposal for a regulation

Recital 12

Text proposed by the Commission

(12) In addition to changing their funding patterns, the IFRS Foundation and EFRAG have undergone governance reforms to ensure that through their structure and processes they accomplish their public interest mission in an independent, efficient, transparent and democratically accountable manner. In relation to the IFRS Foundation, the Monitoring Board was created in 2009 to ensure public accountability and oversight, the effectiveness of the Standards Advisory Council has been enhanced, transparency has been improved and the role of impact assessments has been formalised as part of the due process of the IASB.

Amendment

(12) In addition to changing their funding patterns, the IFRS Foundation and EFRAG have undergone governance reforms to ensure that through their structure and processes they accomplish their public interest mission in an independent, efficient, transparent and democratically accountable manner. In relation to the IFRS Foundation, the Monitoring Board was created in 2009 to ensure public accountability and oversight, the effectiveness of the Standards Advisory Council has been enhanced, transparency has been improved and the role of impact assessments has been formalised as part of the due process of the IASB. Given that the convergence project with the US has stalled, it would be appropriate for the IASB to reassess the role and presence of FASB representatives on the IASB.

Justification

American standard-setters should not write standards adopted in the EU if they have no intention of endorsing them for use in the US.

Amendment 14

Proposal for a regulation

Recital 16

Text proposed by the Commission

(16) This Regulation should provide for the possibility of co-financing activities of certain bodies pursuing an objective forming part of and supporting the Union policy in the field of designing standards, endorsing standards or supervising standard-setting processes related to financial reporting and auditing.

Amendment

(16) This Regulation should provide for the possibility of co-financing activities of certain bodies pursuing an objective forming part of and supporting the Union policy in the field of designing standards, endorsing standards or supervising standard-setting processes related to financial reporting and auditing. This financing should only be given to the bodies in question if it is clear that European accounting concepts, in particular around prudence and the requirement for a true and fair view, are embedded at the core of their conceptual frameworks or structures.

Amendment 16

Proposal for a regulation

Recital 20 a (new)

Text proposed by the Commission

N/A

Amendment

(20 a) A review must be carried out within six months of the adoption of this Regulation to identify whether or not existing IFRSs and in particular the IASB's conceptual framework fulfill the requirements of EU company law. In this review, the Commission should explore the possibility of introducing tougher liability standards for directors and auditors and also to introduce a legally binding true and fair override, that if the accounts prepared in accordance with IFRS do not give a true and fair view, the accounts cannot be signed off. The review must also ensure existing governance arrangements in EFRAG and IASB are overhauled to ensure all private sector interests and commitments are made fully public.

Amendment 18

Proposal for a regulation

Article 2 - paragraph 1

Text proposed by the Commission

1. The objective of the Programme is to improve the conditions for the functioning of the internal market by supporting transparent and independent development of international financial reporting and auditing standards.

Amendment

1. The objective of the Programme is to improve the conditions for the functioning of the internal market, the ability for regulators to enforce prudential regulation and to strengthen corporate governance by supporting transparent and independent development of international financial reporting and auditing standards.

Justification

Accounts play a role in driving better management as well as providing information to investors for the purpose of trading shares.

Amendments

© Sharon Bowles