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"This agreement to renew the financing programme of the IFRS Foundation, the EFRAG and the PIOB is a very important step towards ensuring that these organisations continue to play an important role in the development of accounting and auditing standards and that the EU’s interests are properly taken into account in that process."
Main elements of the agreement:
The proposed regulation will form the legal basis for the continuation of financing the International Financial Reporting Standards (IFRS) Foundation and the Public Interest Oversight Board (PIOB) for the period 2014-2020 and the European Financial Reporting Advisory Group (EFRAG) for the period 2014-2016.
In financial terms, the regulation proposes to contribute annually approximately €4.3 million to the IFRS Foundation (17 per cent of its budget), €3.4 million to EFRAG (43 per cent of its budget) and €0.3 million to PIOB (22 per cent of its budget). The current EU financing programme for these beneficiaries was established in 2009 and will expire at the end of 2013. Consequently, it is important to adopt the proposed regulation formally as soon as possible to ensure the continuity of co-financing of these organisations by the EU.
The agreement limits the financing period of EFRAG to three years in view of prospective reforms of this organisation following the recommendations presented on 12 November 2013 by Mr Philippe Maystadt acting as a special advisor to Commissioner Barnier (IP/13/1065). After that period, the Commission could propose to continue the financing of EFRAG on the basis of an assessment of its activities and the implementation of these reforms.
Background (abridged)
In March 2013 the EU Commissioner for Internal Market and Services, Michel Barnier, mandated Philippe Maystadt to examine ways of reinforcing the EU's contribution to International Financial Reporting Standards and improving the governance of the European bodies involved in developing these standards (IP/13/242). In this respect the final report of Mr Maystadt published on 12 November (IP/10/1365) recommends, as a favoured option, reorganising the current EFRAG with a view to increasing its legitimacy and representativeness. The report is part of a broader debate on accounting standards, which also takes into consideration international developments in this field and the evaluation of the Regulation on the application of the IFRS, planned for the end of 2014.