Philippe Maystadt was appointed by EU Commissioner Barnier as a special advisor on 19 March 2013 to set out recommendations to “reinforce the EU's contribution to International Financial Reporting Standards (IFRS), and to improve the governance of the institutions developing these standards.” The key focus of his advisory role was to carry out a review of the governance of EU bodies in the field of financial reporting and accounting (the European Financial Reporting Advisory Group (EFRAG) and the Accounting Regulatory Committee (ARC)).

IAS Plus has learned from sources close to the process that Mr Maystadt’s draft report, which is not publicly available, contains a brief review of the status quo before submitting three options. Reportedly, the document shows a broad consensus amongst European constituents for a commitment towards globally accepted, high-quality accounting standards and for maintaining the current endorsement process as such, without opening it up to allow for changes to the pronouncements to be endorsed.

When investigating means to improve the current process though, Mr Maystadt proposes three options to consider:

• Under the first option EFRAG would be transformed such that the public policy voice was embedded into the decision-making process already before recommendations are made to the Commission. EFRAG’s current Supervisory Board would be replaced with a Board comprised of representatives from EU institutions, the private sector, and national standard setters. Its role would be to approve comment letters to the IASB and cast opinions on whether to endorse a particular pronouncement. The current Technical Experts Group (TEG) would be transformed such that it would continue to work as a technical group, but its ultimate voting power would be transferred to the new Board.
• Option 2 suggests making EFRAG a part of the European Securities and Market Authority (ESMA). The blueprint for this option would be the U.S. Securities and Exchange Commission (SEC), thus combining the endorsement and the enforcement activities in Europe.
• The third option would be to set up a separate European agency to replace EFRAG.

In his draft report, Mr Maystadt recommends pursuing the first alternative, without indicating any timeline.

As far as the governance of the ARC is concerned, reportedly, the document contains a few observations where improvements may be made. The report does not go into much detail though, as the comitology process had come to an end under the Treaty of Lisbon.

We will inform our readers of any further developments that we become aware of.