FEE comment letter on proposed European Commission Directive
The Federation of European Accountants (Fédération des Experts-comptables Européens, FEE) has publicly released its comment letter on the European Commission proposal for a Directive on the Annual Financial Statements, Consolidated Financial Statements and Related Reports of Certain Type of Undertakings, including comments on amended Transparency Directive, which were released by the Commission on 26 October 2011.
FEE welcomes proposals aimed at better regulation and simplification, as well as reducing excessive and unnecessary administrative burdens. However, FEE comments that the Commission should "have considered and carried out a broader exercise focused on a more fundamental review to better adapt the Directives to 21st century accounting requirements characterised by principles-based standards and reflecting the dynamic developments in corporate reporting".
FEE also laments the lack of an option for European member states to permit the use of the IFRS for SMEs. An extract from the letter follows:
From a European perspective, FEE regrets that the Proposal does not seize the opportunity to allow Member States to make their own decision regarding IFRS for SMEs. It is unfortunate that this opportunity is missed because of differences in the accounting treatment of relatively minor matters between the Proposal and the current IFRS for SMEs.
FEE supports high quality and principles-based global standards in financial reporting, which promote consistency and transparency: we believe that IFRS for SMEs fulfils these characteristics particularly for larger SMEs and large unlisted entities.
The letter also comments on the proposed requirement for companies in the extractive industries and certain forestry companies to provide disclosures about their payments to government on a country-by-country basis, recommending these disclosures should be separate from the annual report, perhaps on company websites.