Activities of Syed KAMALL related to 2012/0364(COD)
Plenary speeches (1)
Union programme in the field of financial reporting and auditing 2014-2020 (debate)
Shadow reports (1)
REPORT on the proposal for a regulation of the European Parliament and of the Council on establishing a Union programme to support specific activities in the field of financial reporting and auditing for the period of 2014-2020 PDF (264 KB) DOC (381 KB)
Amendments (23)
Amendment 14 #
Proposal for a regulation
Recital 2 a (new)
Recital 2 a (new)
(2a) As well as playing a central role in ensuring investors are equipped with important information relating to the balance sheet, profit and loss statement and cash flows, accounts represent a major element of the corporate governance framework, as laid out in Article 15 of the Second Council Directive 77/91/EEC of 13 December 1976, which requires that directors can only make distributions out of unqualified accounts for which the paramount requirement is that they give a true and fair view, or where the accounts are qualified they give a true and fair view subject to matters not material to the lawfulness of a distribution. Directors and auditors can only sign off accounts which give a true and fair view of a company's finances, which is an objectively measurable standard.
Amendment 15 #
Proposal for a regulation
Recital 2 b (new)
Recital 2 b (new)
(2b) It is important to recognise the fundamental differences between the US and EU accounting traditions. The former rules-based system, introduced in 1933, is based on the narrower view that accounts are only about providing timely and reliable information about a company's finances to the capital markets. The latter principles-based system not only has this requirement but also plays a much more central role in ensuring directors do not sign off accounts illegally. It should be noted that there has never been a requirement for accounts to be true and fair in US GAAP and such a requirement is nowhere present in the IASB's Conceptual Framework, despite this being the overriding principle of European accounting law. Although it is clear that attempts have been made by the IASB to introduce a principles-based system, there is some disagreement as to whether convergence with a legally different system is possible or desired.
Amendment 16 #
Proposal for a regulation
Recital 2 c (new)
Recital 2 c (new)
(2c) As well as accounts playing vital roles in protecting shareholder and creditor interests, they form the bedrock of prudential regulation in the sense that all major financial services initiatives rely on companies' accounts, including CRD IV, EMIR and many others. Regulators rely on accounting terminology to understand what risks a company is taking and therefore what is required of that company.
Amendment 17 #
Proposal for a regulation
Recital 3
Recital 3
(3) In a global economy, there is a need for a global accounting language, while taking into account the many different accounting traditions and languages already used. International Financial Reporting Standards (IFRS) developed by the International Accounting Standards Board (IASB) are adopted and used in many jurisdictions around the world, although it must be noted that there are no processes currently in place to ensure that IFRS have been fully implemented in those jurisdictions. Such international accounting standards need to be developed under a transparent and democratically accountable process. To ensure that the interests of the Union are respected and that global standards are of high quality and compatible with Union law, it is essentivital that the interests of the Union are adequately taken into account in that international standard-setting processIASB accepts the central idea at the heart of European accounting, which is the requirement for accounts to be prepared on a prudent basis and to be true and fair for all the functions required of accounts by Union law.
Amendment 21 #
Proposal for a regulation
Recital 4
Recital 4
(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 fourth Council Directive 78/660/EEC of 25 July 1978 and the seventh Council Directive 83-3497EEC of 13 June 1983. 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 2002 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 22 #
Proposal for a regulation
Recital 5
Recital 5
(5) IFRS are issued by the IASB and related interpretations are issued by the IFRS Interpretations Committee, two bodies within the International Financial Reporting Standards Foundation. It is therefore important to establish appropriate funding arrangements for the IFRS Foundation. These funding arrangements will be reliant on the IASB achieving certain milestones in terms of updating its own governance and specific standards and also overhauling its Conceptual Framework to ensure it properly reflects Union company law requirements.
Amendment 23 #
Proposal for a regulation
Recital 6
Recital 6
(6) The European Financial Reporting Advisory Group (EFRAG) was founded in 2001 by European organisations representing issuers, investors and the accountancy profession involved in the financial reporting process. In accordance with Regulation (EC) No 1606/2002, EFRAG provides the Commission with opinions on whether an accounting standard issued by the IASB or an interpretation issued by the IFRS Interpretations Committee, which is to be endorsed, complies with the endorsement criteria set out in that Regulation. EFRAG is also taking up the role of the ‘single European accounting voice’ in the global arena. In that capacity, EFRAG provides input to the IASB's standard-setting process.
Amendment 25 #
Proposal for a regulation
Recital 6 a (new)
Recital 6 a (new)
(6a) There are also calls for EFRAG to take up the role of the 'single European accounting voice'. It must be clearly understood whether there is appetite for such a role from national standard-setters and regulators, given the significant differences of opinion that already exist between Member States. If this role is given to EFRAG, all interactions with the IASB must be made fully transparent and any decisions taken by EFRAG should be made in full consultation with national standard-setters.
Amendment 28 #
Proposal for a regulation
Recital 7
Recital 7
(7) Taking into account EFRAG's keysingle role in supporting internal market law and policy and in repensuring that IFRS are compliant with the requiresmenting European interests in the standard-setting process at international levels of Union company law and policy, as laid out in the IAS Regulation 2002, it is necessary for the Union to ensure EFRAG's stable financing and thus contribute to its funding. Such financing arrangements should be reassessed in the light of any decision taken to give EFRAG more responsibilities in terms of influencing the IASB in addition to fulfilling the basic task required by the IAS Regulation 2002.
Amendment 29 #
Proposal for a regulation
Recital 10
Recital 10
(10) Bodies working in the field of accounting and auditing are highly dependent on funding and play major roles in the Union which are decisive for the functioning of the internal market. The proposed beneficiaries of the Programme established by Decision No 716/2009/EC have been co-financed by operating grants from the Union budget, which has allowed them to increase their financial independence from private-sector and ad- hoc fundingsources, thereby raising their capacity and credibility. Public funding in itself however should not be seen as having confirmed this independence from the private sector. In particular, greater transparency around membership of the IASB's and EFRAG's board and other committees should be required to ensure all stakeholders are represented in the endorsement process. All employees of EFRAG and IASB should be required to declare other relevant financial or job interests or commitments.
Amendment 32 #
Proposal for a regulation
Recital 11
Recital 11
(11) Experience has shown that Union co- financing ensures that beneficiaries benefit from clear, stable, diversified, sound and adequate funding and it contributes to enabling the beneficiaries to accomplish their public interest mission in an independent and efficient manner. Therefore, sufficient funding should continue to be provided by means of a Union contribution towards the functioning of international accounting and auditing standard-setting, and in particular to the IFRS Foundation, EFRAG and the PIOB, subject to certain milestones being achieved in terms of updating the conceptual framework of the IFRS Foundation and clarifying what roles EFRAG and PIOB play.
Amendment 38 #
Proposal for a regulation
Recital 12
Recital 12
(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 representatives of the Financial Accounting Standards Board (FASB) on the IASB.
Amendment 40 #
Proposal for a regulation
Recital 15
Recital 15
(15) The co-financing programme to be established by this Regulation is expected to contribute to the objectives of ensuring comparability and transparency of company accounts throughout the EU, to the global harmonization of financial reporting standards by promoting the international acceptance of IFRS and to promoting convergence and high quality international standards for auditing in all Member States. This programme also contributes to the Europe 2020 strategy by reinforcing the single market of financial services and capital, and contributes to the strategy's external dimension as well. The co-financing programme should not be used to encourage the adoption of or market IFRS in third countries.
Amendment 42 #
Proposal for a regulation
Recital 16
Recital 16
(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 45 #
Proposal for a regulation
Recital 19
Recital 19
(19) In order to promote the Union's interests in the fields of financial reporting and auditing and flexibly adapt to eventual governance and institutional changes in those fields, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of selecting new beneficiaries for the Programme. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, national standard-setters and the European Parliament. The Commission, when preparing and drawing up delegated acts, should ensure a simultaneous, timely and appropriate transmission of relevant documents to the European Parliament and to the Council.
Amendment 46 #
Proposal for a regulation
Recital 20 a (new)
Recital 20 a (new)
(20a) 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 fulfil the requirements of Union 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 50 #
Proposal for a regulation
Article 1 – paragraph 2
Article 1 – paragraph 2
2. The Programme covers the activities of developing or providing input to the development of standards, applying, assthe IASB, which develops IFRS, EFRAG, which assesses whether or not an IFRS is compliant with Union company law as part of the implementation of Union policiess ing or monitoring standards or oversee the field of financial reporting standard-setting processes in suppo auditing and PIOB, which assesses whether or not an ISA is compliant with Union company law as part of the implementation of Union policies in the field of financial reporting and auditing.
Amendment 54 #
Proposal for a regulation
Article 2 – paragraph 1
Article 2 – paragraph 1
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.
Amendment 56 #
Proposal for a regulation
Article 2 – paragraph 2
Article 2 – paragraph 2
Amendment 61 #
Proposal for a regulation
Article 3 – paragraph 2
Article 3 – paragraph 2
Amendment 64 #
Proposal for a regulation
Article 3 – paragraph 3
Article 3 – paragraph 3
Amendment 68 #
Proposal for a regulation
Article 4 – paragraph 1
Article 4 – paragraph 1
Financing under the Programme shall be provided in the form of operating grants, renewed annually after the Commission has conducted an assessment of whether the beneficiaries have achieved the goals laid out in the Programme and subject to approval from the European Parliament.
Amendment 72 #
Proposal for a regulation
Article 6 – paragraph 1
Article 6 – paragraph 1
The financial envelope for the implementation of this Regulation over the period 2014-2020 shall be EUR 58 010 000 in current prices, although this figure can be reduced or adjusted if it is found that the beneficiaries have not achieved certain milestones.