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FEE believes distinguishing between avoidable and unavoidable complexity is not necessary to address the issue

  • FEE (Federation of European Accountants - Fédération des Experts-comptables Européens) (lt green) Image

22 Apr 2014

The Federation of European Accountants (Fédération des Experts-comptables Européens, FEE) has commented on the Conceptual Framework bulletin on complexity published by EFRAG and the National Standard Setters of France, Germany, Italy and the UK in February 2014.

The bulletin considers (1) issues of complexity in financial statements, (2) possible causes, and (3) provides suggestions to the conceptual framework that may reduce the complexity.

FEE agrees with the definition of complexity in the bulletin and also believes that there is a direct relationship between complexity, the costs to preparers and the benefits to users of financial statements. FEE also agrees that the standard-setting process could - to some extent - add to complexity. However, FEE does not support the statement that the standard-setting process contributes to the "avoidable" part of complexity whilst only the complex business environment leads to "unavoidable" complexity:

FEE considers that attempting to distinguish avoidable and unavoidable complexity is a judgmental exercise and we question whether this is necessary in order to address the issue.

FEE therefore comes to the conclusion that complexity should not be considered as a primary factor in standard-setting. Instead, FEE believes that assessing whether undue complexity was introduced in a standard should be considered as part of the field testing and the costs and benefits analysis of a standard.

Please click to access the full comment letter on the FEE website.

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