Activities of Syed KAMALL related to 2016/2006(INI)
Shadow reports (1)
REPORT on International Accounting Standards (IAS) evaluation and the activities of the International Financial Reporting Standards (IFRS) Foundation, the European Financial Reporting Advisory Group (EFRAG) and the Public Interest Oversight Board (PIOB) PDF (341 KB) DOC (145 KB)
Amendments (14)
Amendment 9 #
Motion for a resolution
Recital A
Recital A
A. whereas the International Financial Reporting Standards (IFRS) and the international standards on auditing (ISA) are essentialone component needed for the efficient functioning of the internal market and of the capital markets; whereas the IFRS and ISA arecan be understood as a public good;
Amendment 13 #
Motion for a resolution
Recital B
Recital B
B. whereas the IFRS can strengthen accountability by reducing the information gap between investors and companies, protecting investment and bringing transparency through enhancing the international comparability and quality of financial information and enabling investors and other market participants to make informed economic decisions, and therefore influence the behaviour of actors in financial markets and impact the stability of these markets; notes, however, that this 'decision-usefulness' model of accounting is not entirely consistent with the 'capital adequacy' function of accounting as described in ECJ jurisprudence and the Accounting Directive suggesting that the conceptual basis of accounting per the IFRS Framework does not encompass the purpose of accounts in EU law for which true and fair view of the specified numbers is the standard, as set out in written answer E-016071/2015 from Lord Hill dated 25.2.2016.
Amendment 16 #
Motion for a resolution
Recital B a (new)
Recital B a (new)
Ba. whereas the Accounting Directive states that accounts are "of special importance for the protection of shareholders, members and third parties' and that 'such undertakings offer no safeguards to third parties beyond the amounts of their net assets'; whereas the Accounting Directive also states that its aim is "to protect the interests subsisting in companies with share capital" by ensuring that dividends are not paid out of share capital; whereas this general purpose of accounts can only be fulfilled if the specified numbers in the accounts give a true and fair view of the company's assets, liabilities, financial position and profit or loss;
Amendment 17 #
Motion for a resolution
Recital C
Recital C
C. whereas the International Accounting Standard Board (IASB) functions under the umbrella of the IFRS Foundation – a private not-for-profit corporation – and is the standard setter whose processes shouldmust be transparent, independent, democratic and subject to direct public accountability;
Amendment 22 #
Motion for a resolution
Recital E
Recital E
E. whereas in the EU endorsement process the compliance of the IFRS with the criteria of the IAS Regulation is assessed, particularly through thean IFRS cannot be endorsed for use if it is contrary to the true and fair view principle, which requirements that financial statements must give a ‘'true and fair’ view' of a company’'s assets and liabilities, financial position and profit or loss; whereas the IFRS should be conducive to the public good in Europe and should meet basic criteria related to the quality of information required for financial statements;
Amendment 25 #
Motion for a resolution
Recital G
Recital G
G. whereas, within the EU, different stakeholders – particularly long-term investors –– have raised the issue of the consistency of the IFRS with the legal requirements of the Accounting Directive, in particular the principles of prudence and stewardship; whereas emphasis has also been put on strengthening Europe’'s voice in order to ensure coherence insuch principles are fully acknowledged and embedded throughout the standard-setting process;
Amendment 39 #
Motion for a resolution
Paragraph 1 a (new)
Paragraph 1 a (new)
1a. Notes in particular the upcoming implementation of IFRS 4 (Phase II) and encourages the Commission to ensure that any delay does not result in misalignment or disruption of competition within the insurance industry.
Amendment 42 #
Motion for a resolution
Paragraph 2
Paragraph 2
2. Calls on the Commission to put forward proposals on how the Maystadt recommendation regarding expanding the ‘'public good’' criterion – i.e. that accounting standards should neither jeopardise financial stability in the EU nor hinder the EU’'s economic development – will be taken into account during the endorsement process; urges the Commission, together with EFRAG, to issue clear guidelines on the meaning of the ‘'public good’' and the ‘principle of 'true and fair view’' on the basis of ECJ jurisprudence and the Accounting Directive in order to arrive at a common understanding of these endorsement criteria;
Amendment 43 #
Motion for a resolution
Paragraph 2 a (new)
Paragraph 2 a (new)
2a. Notes that the true and fair view test of Article 4(3) of Directive 2013/34/EU applies to the specified numbers in the accounts as the standard for the purpose of accounts prepared according to European law described in Recitals 3 and 29 of the same directive; highlights that this purpose is related to the capital adequacy function of accounts, i.e. that investors, both creditors and shareholders, use the numbers in the annual accounts as the basis to determine whether a company is "net asset" solvent and to determine dividend payments;
Amendment 44 #
Motion for a resolution
Paragraph 2 b (new)
Paragraph 2 b (new)
2b. Emphasises that a core component of achieving the true and fair view of the specified numbers in the accounts is prudent valuation, which means no understating of losses or overstating of profits, as described in Article 6.1(c)i and ii of the Accounting Directive; points out that this interpretation of the Accounting Directive has been confirmed by numerous ECJ rulings;
Amendment 45 #
Motion for a resolution
Paragraph 2 c (new)
Paragraph 2 c (new)
2c. Notes that Recital 9 of the IAS Regulation allows a degree of flexibility when making a decision to endorse an IFRS by not requiring "a strict conformity with each and every provision of those Directives"; suggests however that this does not extend to allowing IFRS to deviate so far from the general purpose of the 2013 Accounting Directive, which replaced the 4th and 7th Accounting Directives referenced in Article 3.2(i) of the IAS Regulation, that the result of doing so would result in financial statements that overstate profits or understate losses; considers, in this regard, that the endorsement of IAS 39 was possibly contrary to this general purpose of the 4th and 7th Accounting Directives, superseded by the 2013 Accounting Directive, due to its incurred loss model, in particular Article 31. 1 (bb) of the Fourth Council Directive 78/660/EEC, which stated "all foreseeable liabilities and potential losses arising in the course of the financial year concerned or of a previous one [should be measured and recognised], even if such liabilities or losses become apparent only between the date of the balance sheet and the date on which it is drawn up";
Amendment 46 #
Motion for a resolution
Paragraph 3
Paragraph 3
3. Welcomes the intention of the IASB to reintroduce the principle of ‘'prudence’' and re-inforce ‘'stewardship’' in the new Conceptual Framework; calls on the Commission and EFRAG tonotes that the IASB's understanding of the principle of prudence and stewardship is not the same as what ECJ jurisprudence and the Accounting Directive states; calls on the Commission and EFRAG to agree on the meanings of the principles of prudence and stewardship as defined in ECJ jurisprudence and the Accounting Directive and then cooperate with the IASB and national and third-country standard setters to obtain wider support for these principles;
Amendment 54 #
Motion for a resolution
Paragraph 4
Paragraph 4
4. Notes that the effects of an accounting standard must be fully understood; insists that it should be a priority for the IASB and EFRAG to strengthen their impact analyses and to assess the specific needs of investors and companies; calls on the Commission to evaluate the situation and provide the resources needed in order to strengthen the capacity of EFRAG to conduct properremind EFRAG of their obligation to conduct proper impact assessments; notes in particular the absence of an impact assessments for IFRS9;
Amendment 75 #
Motion for a resolution
Paragraph 11
Paragraph 11
11. Welcomes the Commission’'s intention to examine the case for strengthening the EU rules relating to dividend distribution, in light of the fact that Article 15.1(a) Capital Maintenance Directive refers directly to a company's annual accounts as the basis for decisions relating to dividend distribution;