ESMA comment letter on the proposed amended IFRS Taxonomy due process

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10 Feb, 2016

The European Securities and Markets Authority(ESMA) has issued its comment letter on the IFRS Foundation's invitation to comment on proposed amendments to the due process for the development and maintenance of the IFRS Taxonomy, which would give the IASB greater involvement and responsibility.

ESMA is supportive of the IFRS Foundation’s work related to the IFRS Taxonomy and believes that “it will improve the analysis and comparability of financial information of issuers”. 

Commenting on the role of the IASB, ESMA comments:

giving a stronger role to the IASB Board members in the approval of the IFRS Taxonomy would not only provide additional oversight but also increase the acceptance and legitimacy of the taxonomy. As this due process would necessarily play an important role in Europe if the IFRS Taxonomy were to be used for [European Single Electronic Format] ESEF purposes, ESMA believes that incorporating IFRS Taxonomy related activities in the technical programme of the IASB and strengthening the respective roles of the IASB Board and the IFRS Taxonomy Review Panel in the approval of the updates of the IFRS Taxonomy would be beneficial to enhance its credibility.

However, ESMA does highlight that the IASB’s main focus and priority should be to set financial reporting standards for listed entities and that the IFRS Foundation should ensure that the IFRS Taxonomy is only be a “by-product of the standard-setting process” and does not influence the way principles-based standards are developed.

The full comment letter is available on the ESMA website.

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