IFRS in Europe – Background information
This page contains background information about the use of IFRSs in Europe and the various organisations and bodies involved in financial reporting in Europe.
IFRS in Europe chronology
You can access our articles related to Europe for each calendar year by accessing the links below:
Member States of the European Union
Three additional countries are members of the European Economic Area, though not the EU. They are committed to follow EU Directives, including the Accounting Directives:
EU accounting-related Directives and 'IAS Regulation'
- Link to EU Accounting-Related Directives. On this page you will find the Accounting Directive in the various EU languages and all subsequent directives adopting various IFRSs pursuant to the Accounting Directive.
- Download the IAS Regulation (English) (PDF 114k). This is the Regulation requiring companies listed in European securities markets to use IFRSs as adopted by the European Union in their consolidated financial statements starting in 2005. [Regulation (EC)1606/2002 of the European Parliament and of the Council of 19.7.2002]
Adoption of IFRSs for use in the European UnionThe EU Accounting Regime requires that IFRSs be adopted individually for use in the European Union. The adoption process is sometimes referred to as 'endorsement'. The process is as follows, as described by the European Commission – click for Diagram Prepared by the Commission(PDF 85k):
- The IASB (The International Accounting Standards Board) issues a standard.
- EFRAG (the European Financial Reporting Advisory Group) holds consultations with interest groups
- EFRAG delivers its advice to the Commission whether the standard meets the criteria of endorsement. The criteria examined are set forth in Article 3(2) in the IAS Regulation (not contrary to the true and fair view principle set out in the 4th and 7th Company Law Directives, conducive to the European public good, understandability, relevance, reliability and comparability). EFRAG also prepares in cooperation with the Commission an effect study about the potential economic effects of the given standard's application in the EU. EFRAG is mentioned in recital (10) of the IAS Regulation.
- SARG (the Standards Advice Review Group) issues its opinion whether EFRAG's endorsement advice is well-balanced and objective. The legal basis of this body and its opinion is Commission Decision No. 2006/505/EC 3.
- Based on the advice of EFRAG and the opinion of SARG, the Commission prepares a draft endorsement Regulation. The adoption of the Regulation follows a regulatory comitology procedure with scrutiny, in accordance with Articles 5a and 8 of the Council Decision 1999/468. This means in practice that:
- ARC (Accounting Regulatory Committee), set up in accordance with Article 6 of the IAS Regulation votes on the Commission proposal. The qualified majority rule applies. If the vote is favourable (which is the case for the vast majority of the standards to be endorsed),
- The European Parliament and
- The Council of the European Union have 3 months to oppose the adoption of the draft Regulation by the Commission.
- If the European Parliament and the Council give their favourable opinion on the adoption or the 3 months elapsed without opposition from their side, the Commission adopts the draft Regulation. After adoption, it is published in the Official Journal and enters into force on the day laid down in the Regulation itself.
Full text of IFRSs adopted in Europe
Because IFRSs have the force of law in Europe, the full text of the IASs, IFRSs, and Interpretations adopted by the European Commission is published in the Official Journal of the European Union. Please note that 'full text' means the body of the standard and does not include the introduction, implementation guidance, or basis for conclusions. Here is the Link to Standards and Interpretations Adopted by the EC. All of the standards and interpretations are available in all of the official EU languages in the Official Journal.
Accounting Regulatory Committee (ARC)The Accounting Regulatory Committee (ARC) is composed of representatives from Member States and chaired by the European Commission. The Committee was set up pursuant to the requirements of Article 6 of the IAS Regulation (EC/1606/2002). The function of the Committee is a regulatory one and entails providing an opinion on Commission proposals to adopt (endorse) an international accounting standard as envisaged under Article 3 of the IAS Regulation.
- Click for information about the Accounting Regulatory Committee, including operating procedures and list of members, on the EC website.
Standards Advice Review Group (SARG)In July 2006, the European Commission established a Standards Advice Review Group (SARG) in the area of accounting "to ensure objectivity and proper balance of the European Financial Reporting Advisory Group's (EFRAG) opinions". The Group will be composed of independent experts and high-level representatives from National Standard Setters whose experience and competence in accounting are widely recognised. The Group's task will be to assess whether the endorsement advice given by the EFRAG is well balanced and objective. The group will deliver its advice normally within three weeks. The final advice will be published on the Commission's website.
Roundtable for consistent application of IFRSs
The function of the Roundtable is to act as a simple and efficient forum for European accounting experts to identify, at an early stage, emerging and potentially problematic accounting issues in relation to consistent application. The Roundtable will thereby complete the existing European infrastructure contributing to a proper and consistent application of IFRS. The Roundtable would gather views in Member States through audit firms, standard setters and other bodies. It could then identify and group together those issues where it is felt there is a real risk of divergence and recommend which of those should be taken up by IFRIC as a matter of urgency. As such the Roundtable would also act as a filter mechanism. It should be underlined that the Roundtable will not be making any interpretations or guidance under IFRS. This is the task of IFRIC. When allowed to do so by their statutory working rules, EU national enforcers of financial information grouped within CESR/EECS will inform the Roundtable about enforcement decisions taken under the Transparency and Prospectus Directives in relation to financial reporting based on IFRS.
European Securities Committee (ESC)
European Financial Reporting Advisory Group (EFRAG)The European Financial Reporting Advisory Group (EFRAG) is an organisation established by a broad group of organisations representing the European accounting profession, preparers, users, and national standard-setters with the following goals:
- to provide technical expertise to the European Commission concerning the use of IAS within the Europe,
- to participate in IASB's standard setting process, and
- to coordinate within the EU the development of views concerning international accounting standards.
- Click for More Information about EFRAG on our EFRAG page.
- Click for EFRAG Status Report of EU Endorsements of IFRSs.
European Financial Reporting Advisory Group
35 Square de Meeûs
1000 Brussels, Belgium
Telephone: + 32 (2) 510 0888
Fax: + 32 (2) 510 0885
Email: info @ efrag.org
EFRAG Website: http://www.efrag.org
European Securities and Markets Authority (ESMA)The European Securities and Markets Authority (ESMA) is an independent EU Authority that contributes to safeguarding the stability of the European Union's financial system by ensuring the integrity, transparency, efficiency and orderly functioning of securities markets, as well as enhancing investor protection.
In particular, ESMA fosters supervisory convergence both amongst securities regulators, and across financial sectors by working closely with the other European Supervisory Authorities competent in the field of banking (EBA), and insurance and occupational pensions (EIOPA).
ESMA's work on securities legislation contributes to the development of a single rule book in Europe. This serves two purposes; firstly, it ensures the consistent treatment of investors across the Union, enabling an adequate level of protection of investors through effective regulation and supervision. Secondly, it promotes equal conditions of competition for financial service providers.
As part of its role in standard setting and reducing the scope of regulatory arbitrage, ESMA strengthens international supervisory co-operation. Where requested in European law, ESMA undertakes the supervision of certain entities with pan-European reach.
Finally, ESMA also contributes to the financial stability of the European Union, in the short, medium and long-term, through its contribution to the work of the European Systemic Risk Board, which identifies potential risks to the financial system and provides advice to diminish possible threats to the financial stability of the Union. ESMA is also responsible for coordinating actions of securities supervisors or adopting emergency measures when a crisis situation arises.
ESMA was created by the European Commission in January 2011 and is the successor to the Committee of European Securities Regulators (CESR). CESR was the successor to the Forum of European Securities Commission (FESCO). All of the FESCO's and CESR's standards and work have been taken over by ESMA.
European Securities and Markets Authority
103 Rue de Grenelle
75007 Paris, France
Telephone: + 33 1 58 36 43 21
Fax: + 33 1 58 36 43 30
Email: info @ esma.europa.eu
ESMA Website: http://www.esma.europa.eu
Federation des Experts Comptables Europeens (FEE)
The Federation des Experts Comptables Europeens (FEE) is the representative organisation for the accountancy profession in Europe. FEE's membership consists of 43 professional institutes of accountants from 32 countries. FEE member bodies are present in all 27 member states of the European Union and three member countries of EEA. FEE member bodies represent more than 500,000 accountants in Europe. Roughly 45% of these accountants work in public practice, providing a wide range of services to clients. The other 55% work in various capacities in industry, commerce, government and education. FEE Contact information:
Federation des Experts Comptables Europeens
Avenue d'Auderghem 22-28
B-1040 Brussels, Belgium
Telephone: + 32 (2) 285 40 85
Fax: + 32 (2) 231 11 12
Email: Secretariat @ fee.be
FEE Website: http://www.fee.be
Contact CommitteeThe EU maintains a Contact Committee with the European accounting profession. The Contact Committee is an advisory body composed of representatives of the Member States and representatives of the Commission. It was set up by the Commission according to the requirements contained in Article 52 of the Directive 78/660/EEC (4th Directive). The functions of the Contact Committee are:
- to facilitate harmonised application of the Accounting Directives through regular meetings dealing in particular with practical problems arising in connection with their application;
- to advise the Commission, if necessary, on additions or amendments to the Accounting Directives.
European Commission (EC) contact information
Commission of the European Communities
Directorate-General Internal Market and Services
Mail: SPA2 03/205, 1049 Brussels, Belgium
Street address: Rue de Spa (Spastraat) 2, 1000 Brussels, Belgium
Telephone: +32 2 299 1111
Fax: +32 2 299 3081
Email: markt-f4 @ cec.eu.int
Website: European Commission Accounting News