December 2001: EFRAG Reports on Consistency of Modernised Directives and IAS
Responding to a request from the European Commission, the EFRAG Technical Expert Group has concluded, in a Report to the Commission (PDF 74k), that there are "no actual inconsistencies between IAS 1 to 41 (and related SIC) and the ['modernised'] 4th and 7th Directives". However, EFRAG has recommended clarification of the Directives with respect to treatment of fundamental errors and accounting policy changes under IAS 8, the corridor approach under IAS 19, and reverse acquisitions under IAS 22. EFRAG also noted that "a number of standards are in the process of being changed and these could result in conflicts with the Directives".
June 2002: EFRAG recommends EC endorsement of all existing IAS 'en bloc'
In response to a request from the European Commission, EFRAG has reviewed IAS 1-41 and all extant SICs and has concluded that (a) they are not contrary to the 4th and 7th Directives and (b) they meet the required criteria of understandability, relevance, reliability, and comparability. Therefore, EFRAG believes that "it is in the European interest that the process of adoption of the current standards should now be set in motion. Accordingly, we recommend endorsement of the current standards 'en bloc'." Click for EFRAG Letter to EC (PDF 28k).
July 2003: EFRAG recommends EC adoption of IFRS 1
In a Letter to the European Commission (PDF 15k), EFRAG has recommended the adoption in Europe of IFRS 1, First-time Adoption of International Financial Reporting Standards.
November 2003: EFRAG Response to CESR Consultation Paper
EFRAG letter of comment to the Committee of European Securities Regulators (CESR) on CESR's Consultation Paper on the Application of IFRS in 2005: Draft Recommendation for Additional Guidance Regarding the Transition to IFRS. Click to Download EFRAG's Letter (PDF 23k).
December 2003: Proposal to enhance EFRAG's role and working process
EFRAG has invited comment on proposals to enhance its role and streamline its operating processes with the goal of "strengthening European input to the IASB". EFRAG, a private-sector body, was created in mid-2001 by a broad array of groups interested in financial reporting in Europe, including the preparers and the accountancy profession. Its principal goal is to make a pro-active contribution to the work of IASB while also advising the European Commission on the technical assessment of the IASB standards and interpretations for application in Europe. Key proposals include:
- Increasing EFRAG's pro-active role with the IASB, to allow EFRAG to present European concerns at the earliest stage.
- Seeking full recognition of EFRAG as a liaison standard-setter by the IASB.
- Creating an Advisory Forum to allow a wide range of stakeholders to contribute to the European financial reporting debate.
- Making EFRAG's working processes more efficient, including (a) closer relationships with the European national standard setters; (b) smaller and more efficient Supervisory Board; and (c) a full-time Chairman for the Technical Expert Group.
- Increasing EFRAG's resources.
Written comments on the proposals are invited by 12 January 2004, and a public hearing will be held in Brussels on 8 January 2004.
January 2004: New EFRAG Appointments
In January 2004, EFRAG's Supervisory Board made a number of appointments to the Technical Experts Group designed to
strengthen links with the European national standard setters. Click for EFRAG Press Release (PDF 31k)
March 2004: EFRAG Endorses the 'Improved' IASs
EFRAG concluded that the revised IASs resulting from IASB's Improvements Project "meet the requirements of the Regulation (EC) No 1606/2002 of the European Parliament and of the Council on the application of international accounting standards" and, in a Letter to the European Commission (PDF 68k), said: "We believe that it is in the European interest to adopt the revised IASs and, accordingly, we recommend their adoption."
January 2005: EFRAG appoints financial instruments group
EFRAG has appointed a financial instruments working group (FIWG) with the twin goals of addressing current IAS 39 issues (such as potential solutions for the carve-out areas in IAS 39) and wider issues for longer-term revision of IAS 39. FIWG members are:
- Thomas Naumann, Dresdner Bank (Chairman)
- David Bradbery, UBS Investment Bank
- Isabelle Collignon, Cr�dit Agricole SA
- Petri Hofste, KPMG
- Gordong Ireland, PWC
- Victor Jimenez, Banco Bilbao Vizcaya Argentaria
- Ingvar Linse, Swedbank
- Helmut Ortlof, DZ Bank AG
- Massimo Romano, Assicurazioni Generali
- Hugh Shields, Barclays Capital
- Agnes Tardos, PWC
Click to Download FIWG Terms of Reference (PDF 18k).
February 2005: EFRAG appoints insurance working group
EFRAG has restructured its insurance subcommittee into an insurance accounting working group (IAWG). Objectives of the group are to provide pro-active contribution to the work of the IASB in Phase II of its insurance project and to identify interpretation and implementation issues on insurance-specific matters. Members of the working group are:
- Benoit Jaspar, GENERALI (Chairman)
- Bernard Bolle-Reddat, BNP-Paribas
- Ruurd Van den Berg, AEGON
- Jacques Le Douit, AXA
- Hugh Francis, AVIVA
- Catherine Guttmann, Deloitte (EFRAG TEG)
- Joachim Kolschbach, KPMG
- Nigel Masters, PwC
- Carsten Zielke, WestLB
- Observer organisations: European Commission, CESR, CEIOPS, and CEA
- Associate member organisations: ICISA and ACME
Click to Download IAWG Terms of Reference (PDF 20k).
February 2005: EFRAG appoints venture capital working group
EFRAG has appointed a "venture capital working group". Members of the working group are:
- Sigvard Heurlin (Chairman), EFRAG
- Mike Brown, 3i
- Pierre Herve, Natexis PE
- Annie Lambrecht, Ernst & Young
- Heidi Lepantalo, CapMan
- Bart de Leeuw, EFRAG
July 2005: EFRAG enquiry on implementation of IFRSs
On 27 July 2005, the Supervisory Board of EFRAG invited comments on a discussion paper Achieving Consistent Application of IFRS in the EU (Word .DOC 75k). The Supervisory Board's goal is "to stimulate debate in Europe on this very important subject". The paper seeks information about the nature and quantity of IFRS implementation issues that are arising in Europe and discusses various options available to Europe if problems are identified. Broad issues addressed in the paper are:
- Is there a problem and, if there is, what is it?
- What additional mechanisms might Europe need?
- IFRIC: standing ready to meet the demand
- European interpretations/interpretive guidance: not needed if the IFRIC delivers
- European implementation guidance: also not needed if the IFRIC delivers
- A European urgent issues mechanism: not feasible without shortcutting due process, which is not acceptable
- A European mechanism that supports the work of IFRIC: a possibility if needed
Comments were invited on the paper by 6 October 2005.
October 2006: Notes from IASB meeting with EFRAG representatives
On the morning of 17 October 2006, the International Accounting Standards Board met with representatives of the European Financial Reporting Advisory Group (EFRAG). Click to go to the preliminary and unofficial Notes Taken by Deloitte Observers at that meeting.
November 2006: European discussion paper on the conceptual framework
EFRAG and the French accounting standard setter (Conseil National de la Comptabilite, or CNC) have jointly published the first Discussion Paper under the auspices of the Pro-active Accounting Activities in Europe (PAAinE). The Discussion Paper is titled The Conceptual Framework: Starting from the Right Place? It elaborates on the following issues:
- Purpose of the conceptual framework;
- Users of financial reporting;
- Entities within the scope of the Framework; and
- The scope of financial reporting.
EFRAG and CNC invite comments, which are due by 18 March 2007. Click to Download the Discussion Paper PDF 873k).
November 2006: European discussion paper on performance reporting
EFRAG and the Instituto de Contabilidad y Auditor�a de Cuentas (or ICAC) published a Discussion Paper on performance reporting entitled What (if anything) is wrong with the good old income statement? It is the second paper issued under the auspices of the Pro-active Accounting Activities in Europe (PAAinE). The paper identifies and analyses the arguments of those who believe that fundamental changes are needed to the existing performance reporting model, and also explains the reasoning of those who believe such changes are not needed. The paper does not reach any conclusions on the issues, but it sets the scene for a subsequent paper that will explore the underlying issues involved in greater detail. The comment period ends on 31 March 2007. Click to Download the Discussion Paper (PDF 896k).
April 2007: Notes from IASB meeting with EFRAG representatives
On the morning of 17 April 2007, the International Accounting Standards Board met with representatives of the European Financial Reporting Advisory Group (EFRAG). Click to go to the preliminary and unofficial Notes Taken by Deloitte Observers at that meeting.
July 2007: EFRAG discussion paper on revenue recognition
KIn July 2007, EFRAG and the German accounting standard setter jointly published a discussion paper Revenue Recognition – A European Contribution (PDF 694k) as part of EFRAG's Pro-active Accounting in Europe (PAAinE) Initiative. The paper was prepared in recognition that the IASB and the FASB are working on a joint project on revenue recognition. The paper notes that the IASB and FASB have tentatively decided to develop a comprehensive set of principles for revenue recognition that are in line with an asset/liability approach. The PAAinE paper first discusses what revenue is and when it arises. It then develops and compares various approaches to revenue recognition. EFRAG invites comments on the issues in the discussion paper by 10 December 2007 (send to commentletter@efrag.org).
January 2008: European paper on liability-equity distinction
On 28 January 2008, EFRAG and several European accounting standard setters jointly published a discussion paper Distinguishing between Liabilities and Equity as part of EFRAG's Pro-active Accounting Activities in Europe (PAAinE) programme. Comments on the paper are requested by 28 July 2008. The IASB has an Agenda Project on this topic, as does the US Financial Accounting Standards Board (FASB).
- EFRAG's paper. The paper analyses the distinction between equity and liabilities under the existing IASB Framework and current IFRSs. The paper concludes that "the distinction principle used therein has apparent shortcomings. The shortcomings cannot be accommodated by merely 'fixing' bits and pieces or by amending definitions. Rather, a fundamental review of the principle itself is warranted." The paper concludes that participating or sharing in losses is "the decisive factor for distinguishing
equity from debt". Click to download the Discussion Paper (PDF 1,023k).
- FASB's paper. On 30 November 2007, the FASB published its Preliminary Views (PV) on Financial Instruments with Characteristics of Equity (see IASPlus News Story 5 Dec 2007). FASB favours the 'basic ownership' approach, which limits the instruments that can be classified as equity to the lowest residual interests in an entity. The holders of those instruments are viewed as the owners of the entity. All other instruments represent either liabilities or assets. An instrument that reduces the net assets available to the owners of the entity is a liability; and an instrument that enhances net assets available to the owners is an asset. Under this approach, forward contracts, options, and convertible debt would be classified as liabilities or assets. You can download the paper from FASB's Website (PDF 510k) without charge.
- IASB's paper. At its December 2007 meeting, the IASB decided to issue a Discussion Paper on Financial Instruments with Characteristics of Equity. The IASB's DP is planned for March 2008. It would incorporate FASB's preliminary views document, possibly with additional material or questions, and invite public comments.
January 2008: European paper on financial reporting of pensions
EFRAG and several European accounting standard setters have jointly published a discussion paper on The Financial Reporting Of Pensions (PDF 2,849k, 237 pages) as part of EFRAG's Pro-active Accounting Activities in Europe (PAAinE) programme. Work on developing the paper was led by the UK Accounting Standards Board. Comments on the paper are requested by 14 July 2008. The IASB has an Agenda Project on this topic, as does the US Financial Accounting Standards Board (link to FASB website project page). After considering the responses to the proposals in its discussion paper, EFRAG intends to issue a report setting out final recommendations for consideration by the IASB and FASB. Some points about the EFRAG paper:
Rather than seeking to improve existing accounting standards, the paper proposes a fundamental reconsideration of pension accounting. Consequently, some of the views in the paper differ markedly from existing standards on pensions. Recommendations include:
- The same principles should be applied to all pension arrangements, whether 'defined contribution' or 'defined benefit' plans.
- The expected return on assets should not be reported as part of the profit or loss for the year.
- Only benefits that the entity is presently committed (by legal or constructive obligation) to pay should be reflected in the liability. Where the entity has genuine discretion to vary the amount of future benefit, this is not reflected in the liability.
- The focus should shift from mechanisms that spread pension costs over employees' service lives to the principle of reflecting only present obligations as liabilities. Therefore, if benefits are linked to employees' salaries at or near retirement or leaving service, expected future salary increases would only be reflected in the liability when increases are required by law or contract or are seen as non-discretionary. Under this approach, the pension expense and the pension liability is increased only when pensionable salaries actually increase. (The report notes differing views on this issue.)
- Changes in the measurement of assets and liabilities relating to pension plans should not be deferred, such as by spreading them over the average remaining service lives of employees or by a 'corridor' approach under which changes are not
recognised at all unless they exceed a certain threshold.
- Pension liabilities should be measured at a current value, defined as the settlement amount that reflects the cash outflows needed now or in the future to discharge the liability.
- Pension liabilities should be measured by discounting future cash flows using a current market discount rate that reflects the time value of money only, that is, a risk-free rate. Risks, such as mortality risk, would be reported via disclosure.
- Assets held to pay benefits should be reported at current values.
- Regarding financial reporting by pension plans themselves, the IASB should consider withdrawing IAS 26 Accounting and Reporting by Retirement Benefit Plans and requring, instead, that the standards for the general purpose financial reports of pension plans be consistent with IFRSs in general. Thus, a plan's liability to pay benefits in the future should be measured using the same principles as an employer's liability.
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July 2008: Public consultation on EFRAG enhancement
On 23 July 2008, the Supervisory Board of the European Financial Reporting Advisory Group (EFRAG) invited public comment on a proposal for the enhancement of EFRAG. The proposal is in response to calls for strengthening the European contribution to the work of IASB. EFRAG is seeking input on:
- enhancing the EU's pro-active input to the IASB by building on EFRAG's structures and experience;
- further involvement of National Standard Setters and coordination of European resources and the creation of a Planning and Resource Committee
- enhanced governance, transparency of EFRAG and accountability to European organisations and institutions;
- balanced involvement of European stakeholders in EFRAG;
- a significant increase in EFRAG's human and financial resources.
The proposal envisions a new EFRAG structure as shown in the diagram below.
The structure would include:
- A new General Assembly (GA) with a Governance and Nominating Committee. The GA would consist of representatives of major European organisations. It would meet annually to approve the budget and appoint Supervisory Board (SB) members. The Governance and Nominating Committee would make recommendations on appointments to the SB.
- The Supervisory Board (17 members) would have responsibilities for oversight, financing, and some external liaisons (including IASCF, EC, and EP). It would also appoint members of the Technical Expert Group (TEG) and Planning and Resource Committee (PRC).
- The PRC would coordinate EFRAG's proactive work with the IASB agenda and EFRAG technical surveys.
- There would be a new Consultative Group, similar to SAC, to advise TEG, PRC, and SB. It would meet annually.
- Regarding TEG, no major changes are proposed to the existing structure (9 to 12 voting members plus 3 non-voting members from major EU standard-setters).
The proposal envisions a budget for EFRAG of €3 million in 2009. That would double to €6 million in 2010, with the European Commission contributing half. EFRAG would have a technical staff of 20. The proposal envisages that the new structure will be put in place during the first half of 2009. Click to download EFRAG Enhancement Proposal (PDF 352k). Comment deadline is 22 September 2008.
September 2008: We comment on EFRAG enhancement proposals
On 22 July 2008, the Supervisory Board of the European Financial Reporting Advisory Group (EFRAG) invited public comment on proposals for enhancing EFRAG as a way to strengthen the European contribution to the work of IASB (see news item immediately above). The proposal envisions a new structure, a budget of €3 million in 2009 doubling to €6 million in 2010, and an EFRAG technical staff of 20. Deloitte has submitted a Letter of Comment on the Proposals (PDF 18k). While we support EFRAG's proposals to improve its ability to be a strong and coordinated European voice for high quality accounting standards for users in Europe, we caution that EFRAG's constitution should be clear that EFRAG is neither a standard-setter nor a replacement for the existing EU national standard-setters.
December 2008: Final plan for restructuring of EFRAG
Following public consultation, on 10 December 2008 EFRAG published a plan to restructure itself with the goal of 'more influence for EFRAG in international standard-setting process'. The final plan is based on proposals published in July 2008 (see above). The proposals envision a new EFRAG structure as shown in the diagram below. The report states that, to increase its influence on the IASB, 'EFRAG needs to place more emphasis on developing its own research and discussion papers at an early stage of the IASB's consideration of the topics concerned or even before they figure on the IASB agenda'. Among the changes to the current structure being proposed are:
- A new nine-member Planning and Resource Committee (PRC) including four National Standard Setters (NSS), the EFRAG Technical Expert Group (TEG) Chair, and at least two Supervisory Board (SB) members. The PRC will set the agenda for proactive work, provide guidance on the allocation of resources to proactive projects, and monitor progress. The SB will negotiate a Memorandum of Understanding with each of the NSS as a condition for PRC membership.
- An informal Coordination Group, consisting of a wider range of NSS, will also be set up (not shown in the diagram below).
- The SB will have 17 members, including four with public policy experience (see next bullet) plus observers from the EC and CESR.
- Four members of the SB must be experienced in public policy, either at a national or European level. They will not represent particular organisations.
- New Governance and Nominating Committee (GNC) of the General Assembly (GA) in which some National Funding Mechanisms (NFM) have a seat. The GNC will have seven members – four appointed from among GA members and three from among the National Funding Mechanisms (NFM). The GA will continue to consist of representatives of the European organisations that are members of EFRAG.
- An informal Consultative Forum for NFM as a process to coordinate the NFM in the various countries (not shown in the diagram below).
- A new Consultation Group, replacing the current Advisory Forum. It will meet at least annually.
- A three-tier funding model: European organisations, NFMs and the European Commission. The report states that EFRAG has not been able to be proactive 'due to limited resources'.
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The current Technical Expert Group of nine to twelve voting members, plus three non-voting NSS chairs, will continue. TEG responsibilities will be:
- Provide input to the IASB and IFRIC
- Develop proactive discussion papers
- Monitor ongoing IASB activities and provide feedback to the IASB
- Issue endorsement advice to the EC on final pronouncements issued by the IASB
- Issue effect study reports
The plan is described as a 'proposal'. It does not include a plan for or timing of transition.
Click for:
March 2009: New membership of the EFRAG Financial Instruments Working Group (FIWG)
On 9 March 2009, EFRAG appointed new membership of its Financial Instruments Working Group, as follows:
- Mike Ashley (Chairman and TEG member) - KPMG
- David Bradbery - UBS
- Pierre-Henri Damotte - Soci�t� G�n�rale
- Laure Guegan - EY
- Armin Hausmann - Novartis International
- Petri Hofste - ABN Amro
- Gordon Ireland - PwC
- Dennis Jullens - UBS
- Roberto Monachino (TEG Member) - Unicredit
- Cynthia Mustafa - Deutsche Bank
- Nicolas Patrigot - CNCE
- Henricus Seerden - EIB
- Agnes Tardos - PwC
- Brendan van der Hoek - Lloyds TSB
- Thierry Veyssi�re - BNP Paribas
- Pietro Virgili - Banca IntesaSanpaolo
- Yvonne Wiehagen-Knopke - DZ Bank
In addition, the EC, CESR and CEBS will be invited to participate as observers in the Group.
March 2009: European discussion paper on performance reporting
oln 25 March 2009, EFRAG and the national standard-setters of Denmark, France, Germany, Italy, Poland, Spain, Sweden, and the UK published a Discussion Paper on Performance Reporting (PDF 972k) under the PAAinE initiative. Broadly defined, performance is the relationship of the income and expenses of an entity. Traditionally entities reported their performance in an income statement. Under IAS 1(2007), entities report performance either in a single statement of comprehensive income (with a subtotal for traditional profit or loss) or in two statements, an income statement and a statement of comprehensive income. IAS 1 allows flexibilitiy in formats of, and groupings and subtotals in, those statements. The IASB and the FASB have a joint Project on Financial Statement Presentation that encompasses performance reporting. In October 2008, they published a Discussion Paper proposing the structure and format of an entity's financial statements. The new PAAinE discussion paper acknowledges the joint IASB-FASB project but notes that:
There are a number of fundamental issues about the presentation of financial performance information that that discussion paper does not address. Those issues include:
- should the net income line be retained?
- (if it should be retained), what should the basis be for determining whether something is within net income or outside net income?
- what role should recycling have in performance reporting?
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The PAAinE paper observes that 'there is a clear need for one or more key lines to provide a basis for communication to the market and as a starting point for analysis and comparison'. The paper discusses the attributes such a key line needs to have if it is to fulfil this purpose. 'It is therefore important that items of income, expense, gains, and losses are disaggregated, grouped, and aggregated in a way that ensures that the most useful key lines are presented.' The paper notes that whether recycling is needed also depends on the aggregation/disaggregation model used. The final chapters of the paper discuss various disaggregation models. EFRAG invites comments on the paper by 30 September 2009.
April 2009: New EFRAG planning and resource committee
The EFRAG Supervisory Board has appointed an interim Planning and Resource Committee (PRC) as part of EFRAG's restructuring. The role of the PRC will be to set the agenda for proactive work that results in the issuance of discussion papers, position papers, and other outputs. The PRC will provide guidance on the allocation of resources from EFRAG and National Standard Setters (NSS) to proactive projects and will monitor the progress of the work concerned. Members of the interim PRC are:
- Peter Sampers - Member of the EFRAG Supervisory Board, Chair of the PRC ad interim
- Angelo Caso - Chair of the OIC (Italian Standard Setter)
- Ian Mackintosh - Chair of the UK ASB
- Jean-Francois Lepetit - Chair of the ANC (French Standard Setter)
- Hans Van Damme - Member of the EFRAG Supervisory Board
- Stig Enevoldsen - Chairman of EFRAG TEG
Click for Press Release (PDF 60k).
July 2009: New chairman of EFRAG Supervisory Board
Pedro Solbes Mira, the former Member of the European Commission responsible for Economic and Financial Affairs (1999-2004) and Minister of Economy and Finance (2004-2009) of Spain has been appointed Chairman of the EFRAG Supervisory Board, effective immediately. Click for Press Release (PDF 89k).
June 2010: EFRAG strategy for 'proactivity'
In June 2010, EFRAG published its Strategy for European Proactive Financial Reporting Activities (PDF 1,970k). The strategy is intended to enhance EFRAG's role in influuencing future standard-setting developments by engaging with European constituents and providing timely and effective input to the early phases of the IASB's work. EFRAG's strategy is 'underpinned by a set of aims that contribute to achieving EFRAG's overall objectives'. EFRAG identifies its four strategic aims as follows:
- Aim 1: Engage with European constituents to ensure we under stand their issues and how financial reporting affects them;
- Aim 2: Influence the development of global fi nancial reporting standards;
- Aim 3: Provide thought leadership in developing the principles and practices that underpin financial reporting; and
- Aim 4: Promote solutions that improve the quality of information, are practical, and enhance transparency and accountability.
June 2010: EFRAG consultation on its proactive work in Europe Following the publication of its new
Strategy for European Proactive Financial
Reporting Activities
earlier this month, the European Financial Reporting Advisory Group (EFRAG) has
now launched a public
Consultation on Proactive Work (PDF 568k). EFRAG’s proactive work is intended to influence future standard-setting developments by engaging with European constituents and providing timely and effective input to the early phases of the IASB's work. Currently, EFRAG is working among others on projects concerning corporate income tax, business combinations under common control
and
a disclosure framework. Possible future projects include:
- European perspective on development of post implementation reviews (Post-implementation review policy)
- European input to the IASB’s post- implementation review of IFRS 3 Business Combinations
- European Input to the IASB’s post-implementation review of IFRS 8 Operating Segments
- Post-implementation review of IFRIC 12 Service Concession Arrangements
- Government grants
- Understanding the decision environments of users of the financial report
- Application of IFRS to individual financial statements
- Performance reporting – Phase 3
- Share-based payments
The public consultation closes on 30 September 2010.
October 2010: EFRAG paper on Financial Statement Presentation ED The European Financial Reporting Advisory Group (EFRAG) has issued a paper on the
IASB's staff draft of the ED Financial Statement Presentation. The
paper (PDF 174k), which is based on EFRAG’s preliminary views, is intended to stimulate the debate by European constituents on the proposals included in the Draft ED and will serve as a basis for the outreach events in Europe.
EFRAG is jointly organising this outreach events with European National Standard Setters (NSS) from September to November 2010, in order to solicit constituents’ views on the proposals included in the Draft ED and to provide feedback to the IASB on European views. The IASB will participate at these events.
An overview of all dates and places is available in this
press release (link to
EFRAG website). December 2010: EFRAG issues its feedback statement on its proactive consultation The European Financial Reporting Advisory Group (EFRAG) issued
a feedback statement on the
public consultation on its Proactive work. The
feedback statement provides a summary of the comments received, along with EFRAG’s responses and proposed actions.
EFRAG Chairman, Françoise Flores, comments: "We were very encouraged by the response and have heard loud and clearly the message that we need to ensure that our proactive work is focused, practical and reaches the widest possible audience. Our ambition remains for Europe to be at the forefront of developments in financial reporting."
Click for
EFRAG press release (link to EFRAG website) and the
feedback statement
(PDF 860k).
December 2010: EFRAG establishes Advisory Panel on the Role of the
Business Model in Financial Reporting A project on the role
of the business model in financial reporting has commenced as part of the pro-active
work of the European Financial Reporting Advisory Group (EFRAG).
The aim of the project is to provide European input to the future consideration,
development and use of the business model concept in financial reporting. The
project is being led by EFRAG and supported by the standardsetters from the UK
(ASB) and France (ANC). As part of the arrangements for the project, a pan-European
advisory panel is being established to support the work, and EFRAG is now
seeking nominations for membership of that panel.
The objective of the project is to investigate the possible
role of the business model concept within financial reporting. This
investigation will include an assessment of the implications of the business
model on recognition, measurement, presentation, disclosure and performance
reporting within the wider financial report. The project aims to provide
European input into the IASB’s future consideration, development and use of
the business model concept in financial reporting.
Please click for
EFRAG
press release
for further details (link to EFRAG website).
January 2011: EFRAG and UK ASB issue discussion paper on accounting standards
The European Financial Reporting Advisory Group (EFRAG) and the UK Accounting Standards Board (ASB) have issued a Discussion Paper Considering the Effects of Accounting Standards. The purpose of the Discussion Paper is noted as "to put forward, for public comment, proposals to integrate (or further embed) into the standard setting due process a systematic process for considering the effects of accounting standards as those standards are developed and implemented". The discussion paper is open for comment until 31 August 2011.
Click for EFRAG press release (link to EFRAG website) and the discussion paper (PDF 1,421k).
February 2011: EFRAG to host discussion on IASB financial instruments proposals
EFRAG is hosting an IASB discussion forum to provide European stakeholders with the opportunity to ask questions, raise possible concerns and provide comments about the IASB's proposals on hedge accounting, impairment of financial assets and offsetting of financial assets and liabilities, in an open dialogue with an IASB delegation of Board members and staff. The meeting is scheduled to take place in Brussels on Monday 28 February 2011 from 12.00 to 17.00 hrs.
Click for EFRAG press release (link to EFRAG website)
February 2011: EFRAG Outreach on Financial Statement Presentation –
feedback report
Between September and December 2010, the European Financial Reporting
Advisory Group (EFRAG) and the European National Standard Setters jointly organised meetings in ten European cities to assist the IASB in gathering the views of European constituents on the tentative decisions included in the IASB
staff draft of the Exposure Draft Financial Statement Presentation.
Overall, 484 constituents participated in these meetings. European constituents were also invited to provide their feedback on the Draft ED using an online questionnaire. Overall, 133 constituents completed the questionnaire, including 24 constituents who did not participate in the meetings.
EFRAG has now issued a feedback report summarising the
views expressed by European constituents. Some of the results were the following
(quotes from the report's executive summary):
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"The European constituents in all locations consistently questioned whether a new presentation model was really needed, especially considering the costs involved.
[...] The European constituents in several locations mentioned that their preliminary
assessment of costs to implement certain aspects of the proposals and the costs to
maintain the new presentation model would be comparable to the effort associated
with the initial adoption of IFRSs in Europe."
"European constituents in all locations consistently expressed a very strong view that,
prior to proceeding with the presentation matters, the IASB should address the
fundamental issues related to performance reporting, namely, what constitutes
performance and what is the impact of the business model on it; where and how
should the line be drawn between profit and other comprehensive income (OCI), and
whether reclassification of OCI items (recycling) is needed."
"The European constituents were generally split in views as to whether or not the
IASB should develop one generic presentation model for all industries or consider
developing industry-specific models."
"The European constituents generally believed that the proposals in the Draft ED
would result in too much detail on the face of primary statements. This would
obscure key messages and would complicate rather than improve the
communication between an entity and its stakeholders."
"The majority of European constituents participating in the outreach meetings were
against mandating the direct method for presenting operating cash flows."
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Please click for
EFRAG press release (link to EFRAG website) and the
full report (PDF 732k).
March 2011: EFRAG urges IASB and FASB to agree on a joint timetable for finalising a converged financial instruments standard
The European Financial Reporting Advisory Group (EFRAG) has sent a joint letter to both the IASB and the FASB in which it calls on the two bodies to concentrate on agreeing a timetable for producing a finalised converged financial instruments standard. EFRAG says that: 'Reaching agreement on a converged financial instruments standard appears again to be a realistic goal that IASB and FASB can achieve jointly. While it may not be possible to finalise hedge accounting requirements before the end of 2011, agreement on the classification and measurement, impairment and offsetting requirements before the end of 2011 is certainly an achievable and valuable goal'.
It says that recent efforts by the FASB show 'strong signs of the FASB's willingness to work actively towards a converged standard for the accounting for financial instruments'. Then it points out that: 'In the meantime, IASB has not yet defined possible requirements for portfolio hedge accounting, consistent with the objective set for hedge accounting to reflect hedging strategies implemented following an entity's risk management. In its comment letter on the IASB Exposure Draft Hedge Accounting, EFRAG expects to express the view that the IASB should not finalise a standard on the general hedge accounting model, before developing a model for portfolio hedging'.
It concludes by saying that: 'We urge the two Boards to continue their joint efforts to develop a converged high-quality financial instruments standard – with careful consideration of EFRAG's recommendations to that purpose – and agree on a new joint timeline for the finalisation of such standard, consistently with the G20 requirements'.
Please click for EFRAG press release (link to EFRAG website) and the letter (PDF 89k).
April 2011: EFRAG welcomes extension of the convergence deadline
The European Financial Reporting Advisory Group (EFRAG)
has posted to its website a press release welcoming the extension of the
convergence deadline the IASB and FASB announced earlier this month.
Françoise Flores, EFRAG Chairman, is concinced that "[t]he supplementary consultation steps the IASB and FASB have introduced will help tremendously in the finalisation of the standards on Revenue Recognition, Leases, Insurance Contracts and Financial Instruments. It will give European stakeholders the comfort that their concerns will be properly addressed."
The European National Standard Setters (NSS) and EFRAG have organised outreach events throughout Europe in May 2011, in order to provide useful input to the IASB for completion of the projects and to ensure that the final standards are suitable for use in Europe.
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August 2011: FASB and EFRAG co-operate on disclosure framework project
The Financial Accounting Standards Board (FASB) and European Financial Reporting Advisory Group (EFRAG) have formally agreed to work together on their respective projects to develop a disclosure framework, with a view to creating a consistent framework for both United States and international GAAP.
FASB added a disclosure framework project to its agenda in 2009 with the goal of establishing an overarching framework intended to make financial statement disclosures more effective, coordinated, and less redundant. EFRAG is undertaking a 'pro-active' project on disclosures with the objective of making disclosures more relevant for users but at the same time ensure that only useful information is prepared and disclosed. In May 2010, EFRAG appointed an Advisory Panel
chaired by former EFRAG chairman Stig Enevoldsen to provide advice and input to the project.
A possible co-operation between FASB and EFRAG was first
indicated in the agenda papers for the June meeting of EFRAG's Technical Experts
Group (TEG).
At an education session held on the FASB project on 3 August 2011, the FASB agreed to allowing the FASB staff to co-operate with EFRAG staff by leveraging resources and sharing information towards the development of a Discussion Paper on the topic. Discussion in the education session considered the level of involvement of FASB itself (i.e. should it be more than just staff interaction) and what the possible outputs might be (e.g. a joint document, a converged 'core', or some other approach). The education session also covered issues such as the boundaries of financial reporting, the usefulness of disclosures to users and the concept of 'materiality' in the context of disclosures.
At its meeting held on 24 August 2011, the FASB approved a proposed decision process as a starting point for developing its overall disclosure framework. The process consists of a list of questions designed to formalise the FASB's method for identifying (1) needed disclosures and (2) useful disclosure information for consideration in future standard setting. The FASB also indicated that the framework, once finalised, may be used to evaluate (and potentially change) existing disclosure requirements. The FASB expects to issue a discussion paper on the project early next year.
In addition to working with EFRAG, FASB staff also plan to work with the U.S. Securities Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB) to explore whether the application of materiality to disclosures of financial information can be clarified.
Improving the framework for disclosures has been a consistent theme in recent times. The IASB is also considering a project on disclosures, and in July received a report from the New Zealand and Scottish standard setters on possible disclosure improvements to IFRSs. In April 2011, the Accounting Standards Board (ASB) of the United Kingdom Financial Reporting Council (FRC) published a report Cutting Clutter: Combating clutter in annual reports. The International Integrated Reporting Committee (IIRC) is also seeking to simplify and streamline various aspects of reporting through its integrated reporting initiative, for which a Discussion Paper is expected in the coming months.
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October 2011: EFRAG celebrates 10th anniversary
The European Financial Reporting Advisory Group (EFRAG) celebrated its 10th anniversary in 2011. On 13 October, a seminar was held reflecting on past milestones, achievements and signaling future challenges that EFRAG is likely to face.
EFRAG has compiled a summary of the seminar –
EFRAG: PAST - PRESENT - FUTURE
(PDF 506k, link to EFRAG website) –
offering insights about the genesis and history of EFRAG and the challenges EFRAG is facing in the coming years.
On IAS Plus, we also offer an
Interview with Stig Enevoldsen, Chairman of EFRAG from 2004 until 2010, and
a Robert Bruce column Ten Years of EFRAG Achievement.
October 2011: EFRAG and OIC issue discussion paper on business combinations under common control
The European Financial Reporting Advisory Group (EFRAG) and the Organismo Italiano di Contabilità (OIC) have published Discussion Paper Accounting for Business Combinations under Common Control.
The discussion paper aims to start a debate on business combinations under common control (BCUCC) and how it should be reflected in financial statements. Currently, there are multiple methods used in applying BCUCC, the discussion paper takes the first step to analyse the issues from having multiple methods. The discussion paper also notes that "there is no 'ideal' accounting approach" but goes into three different ways of looking at the problem. Comments are due by 30 April 2012.
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22 December 2011: EFRAG and UK ASB issue discussion paper on income tax
The European Financial Reporting Advisory Group (EFRAG) and the Financial Reporting Council's Accounting Standards Board (UK ASB) have issued discussion paper Improving the Financial Reporting of Income Tax.
The discussion paper provides possible enchancements to the requirements for financial reporting of income tax currently in IAS 12. Specifically, it provides possible changes to the reconciliation of tax expense to a standard rate; revisions to the requirements in respect of uncertain tax positions; and whether deferred tax should be discounted. Further, the discussion paper provides alternative approaches that could result in a replacement standard of IAS 12. The alternative approaches are the flow-through approach, the partial allocation approach, the valuation approach, and the accruals approach.
Comments on the paper are invited by 29 June 2012. The discussion paper can be downloaded
via the
press release on EFRAG's website.
22 December 2011: EFRAG consolidated report of joint events on the IASB agenda consultation 2011
The European Financial Reporting Advisory Group (EFRAG), in cooperation with the National Standard Setters (NSS), has issued a consolidated feedback statement summarising the input received from the eight European events held from October to November.
The IASB published a consultation paper in late July 2011 to seek public input on the strategic direction of its future work program. EFRAG and the NSS organised meetings with the purpose to help EFRAG gather European constituents' views for EFRAG's response to the IASB's consultation paper. The outreach meetings were held in October and November in eight European cities. On 5 December 2011, EFRAG issued its final comment letter to the IASB regarding the IASB Agenda Consultation 2011 Request for view. Feedback and views from the constituents who attended the outreach meetings were integrated into EFRAG's final comment letter.
A consolidated report on all activities during this integration feedback received is now available (PDF 598 KB, link to EFRAG website).
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