BETA


2016/2006(INI) International Accounting Standards (IAS) evaluation and activities of the International Financial Reporting Standards (IFRS) Foundation, European Financial Reporting Advisory Group (EFRAG) and the Public Interest Oversight Board (PIOB)

Progress: Procedure completed

RoleCommitteeRapporteurShadows
Lead ECON STOLOJAN Theodor Dumitru (icon: PPE PPE) BERÈS Pervenche (icon: S&D S&D), KAMALL Syed (icon: ECR ECR), VAN NIEUWENHUIZEN Cora (icon: ALDE ALDE), DE MASI Fabio (icon: GUE/NGL GUE/NGL), GIEGOLD Sven (icon: Verts/ALE Verts/ALE), KAPPEL Barbara (icon: ENF ENF)
Committee Opinion CONT CZARNECKI Ryszard (icon: ECR ECR) Cătălin Sorin IVAN (icon: S&D S&D), Marco VALLI (icon: EFDD EFDD)
Lead committee dossier:
Legal Basis:
RoP 54

Events

2016/11/18
   EC - Commission response to text adopted in plenary
Documents
2016/06/07
   EP - Results of vote in Parliament
2016/06/07
   EP - Decision by Parliament, 1st reading/single reading
Details

The European Parliament adopted by 559 votes to 36, with 80 abstentions, a resolution 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).

Importance of IFRS and ISA standards : Members recalled that the International Financial Reporting Standards (IFRS) and the international standards on auditing (ISA) are one essential component needed for the efficient functioning of the internal market and of the capital markets . The purpose of the IFRS is to strengthen accountability by reducing the information gap between investors and companies, to protect investment, to bring transparency through enhancing the international comparability and quality of financial information, to enable investors and other market participants to make informed economic decisions.

The International Accounting Standard Board (IASB) functions under the umbrella of the IFRS Foundation. The EU contributes around 14 % of the IFRS Foundation’s budget and is therefore its largest financial contributor.

Evaluation of the application of IFRS in the EU ten years since their application : Parliament noted the Commission’s IAS evaluation report on the application of the IFRS in the EU and its assessment that the objectives of the IAS Regulation have been met. It regretted that the Commission has not yet proposed the legal changes that are required to solve the shortcomings identified in its evaluation.

Parliament called on the standard setter to ensure that the IFRS are coherent within the existing body of accounting standards and to promote convergence at international level. It called for a more coordinated approach in developing new standards, including coordinated timelines for application, in particular with regard to the implementation of IFRS 9 Financial Instruments and the new IFRS 4 Insurance Contracts. It urged the Commission to put forward diligently legal proposals to this end.

Endorsement process and criteria : Members recalled that an IFRS should not be contrary to the true and fair view principle as included in the Accounting Directive, which requires that financial statements must give a ‘true and fair’ view of a company’s assets and liabilities, financial position and profit or loss.

The Commission is asked to:

comply with the Maystadt recommendation regarding expansion of the ‘public good’ criterion , i.e. that accounting standards should neither jeopardise financial stability in the EU nor hinder the EU’s economic development, and to ensure that this criterion will be fully respected during the endorsement process; together with EFRAG, issue clear guidelines on the meaning of the ‘public good’ and the ‘true and fair view’ principle on the basis of ECJ case-law and the Accounting Directive in order to arrive at a common understanding of these endorsement criteria; put forward a proposal to incorporate Maystadt's definition of the 'public good' criterion into the IAS Regulation.

Simplified standards : according to Members, the effects of an accounting standard must be fully understood. It should be a priority for the IASB and EFRAG to strengthen their impact analyses, notably in the field of macroeconomics, and to assess the different needs of the wide variety of stakeholders, including long-term investors and companies, as well as the general public. Moreover, a less complex accounting standards system would contribute to more uniform implementation so that company financial data are comparable between Member States.

Further involvement of the Parliament : the resolution asked the IASB, the Commission and EFRAG to involve Parliament and the Council at an early stage when developing financial reporting standards in general and in the endorsement process in particular. It called on the Commission to create a space for stakeholders to discuss fundamental principles of accounting in Europe and to grant Parliament the possibility of receiving a short list of EFRAG board president candidates. Parliament should play the role of an active promoter of IFRS.

Taking account of SME’s interests : Parliament noted the Commission’s intention to explore with the IASB the possibility of developing common high-quality and simplified accounting standards for SMEs which could be used, on a voluntary basis, at EU level by SMEs listed on Multilateral Trading Facilities (MTFs), and more specifically SME growth markets. It believed that, as a condition for work to continue in this field, IFRS have to be less complex, and that SME interests should be sufficiently represented on the IASB.

Parliament welcomed the Commission’s intention to examine the case for coordinating the EU rules relating to dividend distribution . It also called on EFRAG and the Commission to examine whether accounting standards allow tax fraud and tax avoidance and to make all the necessary changes to prevent potential abuse.

Activities of the IFRS Foundation, EFRAG and the PIOB : Parliament supported the Commission recommendations that the Monitoring Board of the IFRS Foundation should shift the focus of its attention from the issue of internal organisation to discussing matters of public interest that could be referred to the IFRS Foundation.

Members believed, however that further progress should be made as regards the governance of the IFRS Foundation and the IASB, in particular in terms of transparency, prevention of conflicts of interest and diversity of hired experts. Parliament was particularly in favour of:

the Commission's proposal to consider the reporting needs of investors with different investment time horizons and to provide specific solutions, in particular for long-term investors, when developing their standards; better integration of the IASB into the system of international financial institutions; steps to ensure broad representation (such as consumer representation agencies and finance ministries) of interests and public accountability that will guarantee high-quality accounting standards.

Noting the dominance of private actors on the IASB, Parliament called on the Commission to urge the IFRS Foundation to aim for a more diversified and balanced financing structure , including on the basis of fees and public sources, thus preventing conflicts of interests.

Lastly, Parliament stressed that the EFRAG reform must improve the European contribution to the development of the new IFRS and could participate in the reform of governance of the IFRS Foundation.

Documents
2016/06/07
   EP - End of procedure in Parliament
2016/06/06
   EP - Debate in Parliament
2016/05/03
   EP - Committee report tabled for plenary, single reading
Details

The Committee on Economic and Monetary Affairs adopted the own-initiative report by Theodor Dumitru STOLOJAN (EPP, RO) 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).

Members recalled that the International Financial Reporting Standards (IFRS) and the international standards on auditing (ISA) are one essential component needed for the efficient functioning of the internal market and of the capital markets. The purpose of the IFRS is to strengthen accountability by reducing the information gap between investors and companies, to protect investment, to bring transparency through enhancing the international comparability and quality of financial information, to enable investors and other market participants to make informed economic decisions.

The European Union has delegated the development of the international financial accounting standards to the International Accounting Standards Board (IASB), an independent self-regulatory private body.

Evaluation of the application of IFRS in the EU ten years since their application : Members noted the Commission’s IAS evaluation report on the application of the IFRS in the EU and its assessment that the objectives of the IAS Regulation have been met. They regretted that the Commission has not yet proposed the legal changes that are required to solve the shortcomings identified in its evaluation.

With regard to the endorsement criteria , Members recalled that an IFRS should not be contrary to the true and fair view principle as included in the Accounting Directive, which requires that financial statements must give a ‘true and fair’ view of a company’s assets and liabilities, financial position and profit or loss.

The Commission is asked to:

comply with the Maystadt recommendation regarding expansion of the ‘public good’ criterion , i.e. that accounting standards should neither jeopardise financial stability in the EU nor hinder the EU’s economic development, and to ensure that this criterion will be fully respected during the endorsement process; together with EFRAG, issue clear guidelines on the meaning of the ‘public good’ and the ‘true and fair view’ principle in order to arrive at a common understanding of these endorsement criteria; put forward a proposal to incorporate Maystadt's definition of the 'public good' criterion into the IAS Regulation.

The report called on the standard setter to ensure that the IFRS are coherent within the existing body of accounting standards and to promote convergence at international level. It called for a more coordinated approach in developing new standards, including coordinated timelines for application, and urged the Commission to put forward diligently legal proposals to this end.

Members noted that the effects of an accounting standard must be fully understood : accordingly, it should be a priority for the IASB and EFRAG to strengthen their impact analyses, notably in the field of macroeconomics, and to assess the different needs of the wide variety of stakeholders, including long-term investors and companies, as well as the general public. They believed that a less complex accounting standards system would contribute to more uniform implementation so that company financial data are comparable between Member States.

The report asked the IASB, the Commission and EFRAG to involve Parliament and the Council at an early stage when developing financial reporting standards in general and in the endorsement process in particular. It called on the Commission to create a space for stakeholders to discuss fundamental principles of accounting in Europe and to grant Parliament the possibility of receiving a short list of EFRAG board president candidates. Parliament should play the role of an active promoter of IFRS.

The committee noted the Commission’s intention to explore with the IASB the possibility of developing common high-quality and simplified accounting standards for SMEs which could be used, on a voluntary basis, at EU level by SMEs listed on Multilateral Trading Facilities (MTFs), and more specifically SME growth markets. It believed that, as a condition for work to continue in this field, IFRS have to be less complex, and that SME interests should be sufficiently represented on the IASB.

The report welcomed the Commission’s intention to examine the case for coordinating the EU rules relating to dividend distribution . It also called on EFRAG and the Commission to examine whether accounting standards allow tax fraud and tax avoidance and to make all the necessary changes to prevent potential abuse.

Activities of the IFRS Foundation, EFRAG and the PIOB : the report supported the Commission recommendations that the Monitoring Board of the IFRS Foundation should shift the focus of its attention from the issue of internal organisation to discussing matters of public interest that could be referred to the IFRS Foundation.

Members believed, however that further progress should be made as regards the governance of the IFRS Foundation and the IASB, in particular in terms of transparency, prevention of conflicts of interest and diversity of hired experts. They were particularly in favour of:

the Commission's proposal to consider the reporting needs of investors with different investment time horizons and to provide specific solutions, in particular for long-term investors, when developing their standards; better integration of the IASB into the system of international financial institutions; steps to ensure broad representation (such as consumer representation agencies and finance ministries) of interests and public accountability that will guarantee high-quality accounting standards.

Noting the dominance of private actors on the IASB, Members called on the Commission to urge the IFRS Foundation to aim for a more diversified and balanced financing structure , including on the basis of fees and public sources, thus preventing conflicts of interests.

Lastly, the report stressed that the EFRAG reform must improve the European contribution to the development of the new IFRS and could participate in the reform of governance of the IFRS Foundation.

Documents
2016/04/26
   EP - Vote in committee, 1st reading/single reading
2016/04/08
   EP - Committee opinion
Documents
2016/03/02
   EP - Amendments tabled in committee
Documents
2016/02/03
   EP - CZARNECKI Ryszard (ECR) appointed as rapporteur in CONT
2016/01/21
   EP - Committee referral announced in Parliament, 1st reading/single reading
2016/01/12
   EP - Committee draft report
Documents
2015/09/10
   EP - STOLOJAN Theodor Dumitru (PPE) appointed as rapporteur in ECON

Documents

Activities

Votes

A8-0172/2016 - Theodor Dumitru Stolojan - Résolution

2016/06/07 Outcome: +: 559, 0: 80, -: 36
DE FR PL IT ES GB RO BE AT BG PT HU CZ NL SE DK HR SK LT FI SI LU IE EE LV EL MT CY
Total
91
72
47
65
45
52
27
20
18
17
20
17
21
25
18
13
11
11
10
11
8
6
9
6
6
18
6
5
icon: PPE PPE
195

Denmark PPE

For (1)

1

Finland PPE

2

Luxembourg PPE

3

Estonia PPE

For (1)

1

Cyprus PPE

1
icon: S&D S&D
173

Netherlands S&D

3

Croatia S&D

2

Finland S&D

1

Slovenia S&D

For (1)

1

Luxembourg S&D

For (1)

1

Ireland S&D

For (1)

1

Estonia S&D

For (1)

1

Latvia S&D

1

Malta S&D

3

Cyprus S&D

2
icon: ALDE ALDE
66

United Kingdom ALDE

1

Romania ALDE

2

Austria ALDE

For (1)

1

Croatia ALDE

2

Slovenia ALDE

For (1)

1

Luxembourg ALDE

For (1)

1

Ireland ALDE

For (1)

1

Estonia ALDE

3
icon: ECR ECR
60

Italy ECR

2

Romania ECR

For (1)

1

Bulgaria ECR

2

Czechia ECR

2

Netherlands ECR

2

Croatia ECR

For (1)

1

Slovakia ECR

2

Lithuania ECR

1
2

Latvia ECR

For (1)

1

Greece ECR

Abstain (1)

1
icon: Verts/ALE Verts/ALE
46

United Kingdom Verts/ALE

5

Belgium Verts/ALE

2

Austria Verts/ALE

3

Hungary Verts/ALE

2

Netherlands Verts/ALE

2

Denmark Verts/ALE

For (1)

1

Croatia Verts/ALE

For (1)

1

Lithuania Verts/ALE

For (1)

1

Finland Verts/ALE

For (1)

1

Slovenia Verts/ALE

For (1)

1

Luxembourg Verts/ALE

For (1)

1

Estonia Verts/ALE

For (1)

1
icon: GUE/NGL GUE/NGL
49

Italy GUE/NGL

3

United Kingdom GUE/NGL

Abstain (1)

1

Portugal GUE/NGL

For (1)

4

Netherlands GUE/NGL

2

Sweden GUE/NGL

Abstain (1)

1

Denmark GUE/NGL

Abstain (1)

1

Finland GUE/NGL

Abstain (1)

1

Ireland GUE/NGL

3

Cyprus GUE/NGL

2
icon: NI NI
14

Germany NI

Abstain (1)

2

France NI

3

Poland NI

Abstain (1)

1

United Kingdom NI

For (1)

1

Hungary NI

2
icon: ENF ENF
38

Germany ENF

Against (1)

1

Poland ENF

Against (1)

Abstain (1)

2

United Kingdom ENF

Against (1)

1

Romania ENF

1

Belgium ENF

Abstain (1)

1

Netherlands ENF

4
icon: EFDD EFDD
34

Germany EFDD

Against (1)

1

France EFDD

1

Poland EFDD

1

Czechia EFDD

Against (1)

1

Sweden EFDD

2

Lithuania EFDD

For (1)

1
AmendmentsDossier
120 2016/2006(INI)
2016/03/02 ECON 101 amendments...
source: 578.642
2016/03/14 ECON 19 amendments...
source: 578.787

History

(these mark the time of scraping, not the official date of the change)

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  • date: 2016-04-26T00:00:00 body: EP type: Vote in committee, 1st reading/single reading committees: body: EP responsible: False committee: CONT date: 2016-02-03T00:00:00 committee_full: Budgetary Control rapporteur: group: ECR name: CZARNECKI Ryszard body: EP shadows: group: S&D name: BERÈS Pervenche group: ECR name: KAMALL Syed group: ALDE name: VAN NIEUWENHUIZEN Cora group: GUE/NGL name: DE MASI Fabio group: Verts/ALE name: GIEGOLD Sven group: ENF name: KAPPEL Barbara responsible: True committee: ECON date: 2015-09-10T00:00:00 committee_full: Economic and Monetary Affairs rapporteur: group: EPP name: STOLOJAN Theodor Dumitru
  • date: 2016-05-03T00:00:00 docs: url: http://www.europarl.europa.eu/sides/getDoc.do?type=REPORT&mode=XML&reference=A8-2016-0172&language=EN type: Committee report tabled for plenary, single reading title: A8-0172/2016 body: EP type: Committee report tabled for plenary, single reading
  • date: 2016-06-06T00:00:00 docs: url: http://www.europarl.europa.eu/sides/getDoc.do?secondRef=TOC&language=EN&reference=20160606&type=CRE type: Debate in Parliament title: Debate in Parliament body: EP type: Debate in Parliament
  • date: 2016-06-07T00:00:00 docs: url: http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P8-TA-2016-0248 type: Decision by Parliament, 1st reading/single reading title: T8-0248/2016 body: EP type: Decision by Parliament, 1st reading/single reading
commission
  • body: EC dg: Economic and Financial Affairs commissioner: HILL Jonathan
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docs
  • date: 2016-01-12T00:00:00 docs: url: http://www.europarl.europa.eu/sides/getDoc.do?type=COMPARL&mode=XML&language=EN&reference=PE575.121 title: PE575.121 type: Committee draft report body: EP
  • date: 2016-03-02T00:00:00 docs: url: http://www.europarl.europa.eu/sides/getDoc.do?type=COMPARL&mode=XML&language=EN&reference=PE578.642 title: PE578.642 type: Amendments tabled in committee body: EP
  • date: 2016-04-08T00:00:00 docs: url: http://www.europarl.europa.eu/sides/getDoc.do?type=COMPARL&mode=XML&language=EN&reference=PE576.690&secondRef=02 title: PE576.690 committee: CONT type: Committee opinion body: EP
  • date: 2016-11-18T00:00:00 docs: url: /oeil/spdoc.do?i=27174&j=0&l=en title: SP(2016)612 type: Commission response to text adopted in plenary
events
  • date: 2016-01-21T00:00:00 type: Committee referral announced in Parliament, 1st reading/single reading body: EP
  • date: 2016-04-26T00:00:00 type: Vote in committee, 1st reading/single reading body: EP
  • date: 2016-05-03T00:00:00 type: Committee report tabled for plenary, single reading body: EP docs: url: http://www.europarl.europa.eu/sides/getDoc.do?type=REPORT&mode=XML&reference=A8-2016-0172&language=EN title: A8-0172/2016 summary: The Committee on Economic and Monetary Affairs adopted the own-initiative report by Theodor Dumitru STOLOJAN (EPP, RO) 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). Members recalled that the International Financial Reporting Standards (IFRS) and the international standards on auditing (ISA) are one essential component needed for the efficient functioning of the internal market and of the capital markets. The purpose of the IFRS is to strengthen accountability by reducing the information gap between investors and companies, to protect investment, to bring transparency through enhancing the international comparability and quality of financial information, to enable investors and other market participants to make informed economic decisions. The European Union has delegated the development of the international financial accounting standards to the International Accounting Standards Board (IASB), an independent self-regulatory private body. Evaluation of the application of IFRS in the EU ten years since their application : Members noted the Commission’s IAS evaluation report on the application of the IFRS in the EU and its assessment that the objectives of the IAS Regulation have been met. They regretted that the Commission has not yet proposed the legal changes that are required to solve the shortcomings identified in its evaluation. With regard to the endorsement criteria , Members recalled that an IFRS should not be contrary to the true and fair view principle as included in the Accounting Directive, which requires that financial statements must give a ‘true and fair’ view of a company’s assets and liabilities, financial position and profit or loss. The Commission is asked to: comply with the Maystadt recommendation regarding expansion of the ‘public good’ criterion , i.e. that accounting standards should neither jeopardise financial stability in the EU nor hinder the EU’s economic development, and to ensure that this criterion will be fully respected during the endorsement process; together with EFRAG, issue clear guidelines on the meaning of the ‘public good’ and the ‘true and fair view’ principle in order to arrive at a common understanding of these endorsement criteria; put forward a proposal to incorporate Maystadt's definition of the 'public good' criterion into the IAS Regulation. The report called on the standard setter to ensure that the IFRS are coherent within the existing body of accounting standards and to promote convergence at international level. It called for a more coordinated approach in developing new standards, including coordinated timelines for application, and urged the Commission to put forward diligently legal proposals to this end. Members noted that the effects of an accounting standard must be fully understood : accordingly, it should be a priority for the IASB and EFRAG to strengthen their impact analyses, notably in the field of macroeconomics, and to assess the different needs of the wide variety of stakeholders, including long-term investors and companies, as well as the general public. They believed that a less complex accounting standards system would contribute to more uniform implementation so that company financial data are comparable between Member States. The report asked the IASB, the Commission and EFRAG to involve Parliament and the Council at an early stage when developing financial reporting standards in general and in the endorsement process in particular. It called on the Commission to create a space for stakeholders to discuss fundamental principles of accounting in Europe and to grant Parliament the possibility of receiving a short list of EFRAG board president candidates. Parliament should play the role of an active promoter of IFRS. The committee noted the Commission’s intention to explore with the IASB the possibility of developing common high-quality and simplified accounting standards for SMEs which could be used, on a voluntary basis, at EU level by SMEs listed on Multilateral Trading Facilities (MTFs), and more specifically SME growth markets. It believed that, as a condition for work to continue in this field, IFRS have to be less complex, and that SME interests should be sufficiently represented on the IASB. The report welcomed the Commission’s intention to examine the case for coordinating the EU rules relating to dividend distribution . It also called on EFRAG and the Commission to examine whether accounting standards allow tax fraud and tax avoidance and to make all the necessary changes to prevent potential abuse. Activities of the IFRS Foundation, EFRAG and the PIOB : the report supported the Commission recommendations that the Monitoring Board of the IFRS Foundation should shift the focus of its attention from the issue of internal organisation to discussing matters of public interest that could be referred to the IFRS Foundation. Members believed, however that further progress should be made as regards the governance of the IFRS Foundation and the IASB, in particular in terms of transparency, prevention of conflicts of interest and diversity of hired experts. They were particularly in favour of: the Commission's proposal to consider the reporting needs of investors with different investment time horizons and to provide specific solutions, in particular for long-term investors, when developing their standards; better integration of the IASB into the system of international financial institutions; steps to ensure broad representation (such as consumer representation agencies and finance ministries) of interests and public accountability that will guarantee high-quality accounting standards. Noting the dominance of private actors on the IASB, Members called on the Commission to urge the IFRS Foundation to aim for a more diversified and balanced financing structure , including on the basis of fees and public sources, thus preventing conflicts of interests. Lastly, the report stressed that the EFRAG reform must improve the European contribution to the development of the new IFRS and could participate in the reform of governance of the IFRS Foundation.
  • date: 2016-06-06T00:00:00 type: Debate in Parliament body: EP docs: url: http://www.europarl.europa.eu/sides/getDoc.do?secondRef=TOC&language=EN&reference=20160606&type=CRE title: Debate in Parliament
  • date: 2016-06-07T00:00:00 type: Results of vote in Parliament body: EP docs: url: https://oeil.secure.europarl.europa.eu/oeil/popups/sda.do?id=27174&l=en title: Results of vote in Parliament
  • date: 2016-06-07T00:00:00 type: Decision by Parliament, 1st reading/single reading body: EP docs: url: http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P8-TA-2016-0248 title: T8-0248/2016 summary: The European Parliament adopted by 559 votes to 36, with 80 abstentions, a resolution 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). Importance of IFRS and ISA standards : Members recalled that the International Financial Reporting Standards (IFRS) and the international standards on auditing (ISA) are one essential component needed for the efficient functioning of the internal market and of the capital markets . The purpose of the IFRS is to strengthen accountability by reducing the information gap between investors and companies, to protect investment, to bring transparency through enhancing the international comparability and quality of financial information, to enable investors and other market participants to make informed economic decisions. The International Accounting Standard Board (IASB) functions under the umbrella of the IFRS Foundation. The EU contributes around 14 % of the IFRS Foundation’s budget and is therefore its largest financial contributor. Evaluation of the application of IFRS in the EU ten years since their application : Parliament noted the Commission’s IAS evaluation report on the application of the IFRS in the EU and its assessment that the objectives of the IAS Regulation have been met. It regretted that the Commission has not yet proposed the legal changes that are required to solve the shortcomings identified in its evaluation. Parliament called on the standard setter to ensure that the IFRS are coherent within the existing body of accounting standards and to promote convergence at international level. It called for a more coordinated approach in developing new standards, including coordinated timelines for application, in particular with regard to the implementation of IFRS 9 Financial Instruments and the new IFRS 4 Insurance Contracts. It urged the Commission to put forward diligently legal proposals to this end. Endorsement process and criteria : Members recalled that an IFRS should not be contrary to the true and fair view principle as included in the Accounting Directive, which requires that financial statements must give a ‘true and fair’ view of a company’s assets and liabilities, financial position and profit or loss. The Commission is asked to: comply with the Maystadt recommendation regarding expansion of the ‘public good’ criterion , i.e. that accounting standards should neither jeopardise financial stability in the EU nor hinder the EU’s economic development, and to ensure that this criterion will be fully respected during the endorsement process; together with EFRAG, issue clear guidelines on the meaning of the ‘public good’ and the ‘true and fair view’ principle on the basis of ECJ case-law and the Accounting Directive in order to arrive at a common understanding of these endorsement criteria; put forward a proposal to incorporate Maystadt's definition of the 'public good' criterion into the IAS Regulation. Simplified standards : according to Members, the effects of an accounting standard must be fully understood. It should be a priority for the IASB and EFRAG to strengthen their impact analyses, notably in the field of macroeconomics, and to assess the different needs of the wide variety of stakeholders, including long-term investors and companies, as well as the general public. Moreover, a less complex accounting standards system would contribute to more uniform implementation so that company financial data are comparable between Member States. Further involvement of the Parliament : the resolution asked the IASB, the Commission and EFRAG to involve Parliament and the Council at an early stage when developing financial reporting standards in general and in the endorsement process in particular. It called on the Commission to create a space for stakeholders to discuss fundamental principles of accounting in Europe and to grant Parliament the possibility of receiving a short list of EFRAG board president candidates. Parliament should play the role of an active promoter of IFRS. Taking account of SME’s interests : Parliament noted the Commission’s intention to explore with the IASB the possibility of developing common high-quality and simplified accounting standards for SMEs which could be used, on a voluntary basis, at EU level by SMEs listed on Multilateral Trading Facilities (MTFs), and more specifically SME growth markets. It believed that, as a condition for work to continue in this field, IFRS have to be less complex, and that SME interests should be sufficiently represented on the IASB. Parliament welcomed the Commission’s intention to examine the case for coordinating the EU rules relating to dividend distribution . It also called on EFRAG and the Commission to examine whether accounting standards allow tax fraud and tax avoidance and to make all the necessary changes to prevent potential abuse. Activities of the IFRS Foundation, EFRAG and the PIOB : Parliament supported the Commission recommendations that the Monitoring Board of the IFRS Foundation should shift the focus of its attention from the issue of internal organisation to discussing matters of public interest that could be referred to the IFRS Foundation. Members believed, however that further progress should be made as regards the governance of the IFRS Foundation and the IASB, in particular in terms of transparency, prevention of conflicts of interest and diversity of hired experts. Parliament was particularly in favour of: the Commission's proposal to consider the reporting needs of investors with different investment time horizons and to provide specific solutions, in particular for long-term investors, when developing their standards; better integration of the IASB into the system of international financial institutions; steps to ensure broad representation (such as consumer representation agencies and finance ministries) of interests and public accountability that will guarantee high-quality accounting standards. Noting the dominance of private actors on the IASB, Parliament called on the Commission to urge the IFRS Foundation to aim for a more diversified and balanced financing structure , including on the basis of fees and public sources, thus preventing conflicts of interests. Lastly, Parliament stressed that the EFRAG reform must improve the European contribution to the development of the new IFRS and could participate in the reform of governance of the IFRS Foundation.
  • date: 2016-06-07T00:00:00 type: End of procedure in Parliament body: EP
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  • body: EC dg: url: http://ec.europa.eu/dgs/economy_finance/index_en.htm title: Economic and Financial Affairs commissioner: HILL Jonathan
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Financial services, financial reporting and auditing
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  • The Committee on Economic and Monetary Affairs adopted the own-initiative report by Theodor Dumitru STOLOJAN (EPP, RO) 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).

    Members recalled that the International Financial Reporting Standards (IFRS) and the international standards on auditing (ISA) are one essential component needed for the efficient functioning of the internal market and of the capital markets. The purpose of the IFRS is to strengthen accountability by reducing the information gap between investors and companies, to protect investment, to bring transparency through enhancing the international comparability and quality of financial information, to enable investors and other market participants to make informed economic decisions.

    The European Union has delegated the development of the international financial accounting standards to the International Accounting Standards Board (IASB), an independent self-regulatory private body.

    Evaluation of the application of IFRS in the EU ten years since their application: Members noted the Commission’s IAS evaluation report on the application of the IFRS in the EU and its assessment that the objectives of the IAS Regulation have been met. They regretted that the Commission has not yet proposed the legal changes that are required to solve the shortcomings identified in its evaluation.

    With regard to the endorsement criteria, Members recalled that an IFRS should not be contrary to the true and fair view principle as included in the Accounting Directive, which requires that financial statements must give a ‘true and fair’ view of a company’s assets and liabilities, financial position and profit or loss.

    The Commission is asked to:

    • comply with the Maystadt recommendation regarding expansion of the ‘public good’ criterion, i.e. that accounting standards should neither jeopardise financial stability in the EU nor hinder the EU’s economic development, and to ensure that this criterion will be fully respected during the endorsement process;
    • together with EFRAG, issue clear guidelines on the meaning of the ‘public good’ and the ‘true and fair view’ principle in order to arrive at a common understanding of these endorsement criteria; 
    • put forward a proposal to incorporate Maystadt's definition of the 'public good' criterion into the IAS Regulation.

    The report called on the standard setter to ensure that the IFRS are coherent within the existing body of accounting standards and to promote convergence at international level. It called for a more coordinated approach in developing new standards, including coordinated timelines for application, and urged the Commission to put forward diligently legal proposals to this end.

    Members noted that the effects of an accounting standard must be fully understood: accordingly, it should be a priority for the IASB and EFRAG to strengthen their impact analyses, notably in the field of macroeconomics, and to assess the different needs of the wide variety of stakeholders, including long-term investors and companies, as well as the general public. They believed that a less complex accounting standards system would contribute to more uniform implementation so that company financial data are comparable between Member States.

    The report asked the IASB, the Commission and EFRAG to involve Parliament and the Council at an early stage when developing financial reporting standards in general and in the endorsement process in particular. It called on the Commission to create a space for stakeholders to discuss fundamental principles of accounting in Europe and to grant Parliament the possibility of receiving a short list of EFRAG board president candidates. Parliament should play the role of an active promoter of IFRS.

    The committee noted the Commission’s intention to explore with the IASB the possibility of developing common high-quality and simplified accounting standards for SMEs which could be used, on a voluntary basis, at EU level by SMEs listed on Multilateral Trading Facilities (MTFs), and more specifically SME growth markets. It believed that, as a condition for work to continue in this field, IFRS have to be less complex, and that SME interests should be sufficiently represented on the IASB.

    The report welcomed the Commission’s intention to examine the case for coordinating the EU rules relating to dividend distribution. It also called on EFRAG and the Commission to examine whether accounting standards allow tax fraud and tax avoidance and to make all the necessary changes to prevent potential abuse.

    Activities of the IFRS Foundation, EFRAG and the PIOB: the report supported the Commission recommendations that the Monitoring Board of the IFRS Foundation should shift the focus of its attention from the issue of internal organisation to discussing matters of public interest that could be referred to the IFRS Foundation.

    Members believed, however that further progress should be made as regards the governance of the IFRS Foundation and the IASB, in particular in terms of transparency, prevention of conflicts of interest and diversity of hired experts. They were particularly in favour of:

    • the Commission's proposal to consider the reporting needs of investors with different investment time horizons and to provide specific solutions, in particular for long-term investors, when developing their standards;
    • better integration of the IASB into the system of international financial institutions;
    • steps to ensure broad representation (such as consumer representation agencies and finance ministries) of interests and public accountability that will guarantee high-quality accounting standards.

    Noting the dominance of private actors on the IASB, Members called on the Commission to urge the IFRS Foundation to aim for a more diversified and balanced financing structure, including on the basis of fees and public sources, thus preventing conflicts of interests.

    Lastly, the report stressed that the EFRAG reform must improve the European contribution to the development of the new IFRS and could participate in the reform of governance of the IFRS Foundation.

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  • date: 2016-05-09T00:00:00 body: EP type: Indicative plenary sitting date, 1st reading/single reading
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  • body: EP responsible: False committee_full: Budgetary Control committee: CONT
  • body: EP responsible: True committee: ECON date: 2015-09-10T00:00:00 committee_full: Economic and Monetary Affairs rapporteur: group: EPP name: STOLOJAN Theodor Dumitru
links
other
    procedure
    reference
    2016/2006(INI)
    title
    International Accounting Standards (IAS) evaluation and activities of the International Financial Reporting Standards (IFRS) Foundation, European Financial Reporting Advisory Group (EFRAG) and the Public Interest Oversight Board (PIOB)
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    Rules of Procedure of the European Parliament EP 052
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