ESMA opposes national or regional implementation guidance for IFRSs

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28 Nov, 2019

At the 'IFRS & Regulation: Searching for Common Ground' conference convened in Bussels today by the European Financial Reporting Advisory Group (EFRAG), Steven Maijoor, Chair of the European Securities and Markets Authority (ESMA), provided a keynote speech.

In answering the question of "Are IFRS still well-suited to serve European capital markets?”, Mr Maijoor noted the strong relationship between IFRS and building a Capital Markets Union, the role of IFRS in enabling effective accounting enforcement, and the role of IFRS in facing the upcoming challenges and opportunities arising from electronic reporting and sustainability. He especially warned against local interpretations of IFRS:

The principles-based nature of IFRS offers a suitable basis for adapting to the inevitable variety of facts that occur in the reality of business in a diverse jurisdiction such as the EU, while still enabling a sound and consistent approach to both implementation and enforcement. [...] As you will understand, ESMA does not support the issuance of national or regional implementation guidance for IFRS, not only because it would be contrary to the IAS Regulation, but also because it would be potentially detrimental for the much-needed EU-wide consistent application of IFRS. Furthermore, EU or national specific solutions weaken our position as a single, cohesive jurisdiction and makes it less influential in the accounting debate at global level.

However, Mr Maijoor also noted that to continue being relevant, IFRS need to consider how future projections – are already required to be made, for example, in impairment calculations – need to take into account risks arising from aspects relating to sustainability risks and opportunities. He stated that we need to acknowledge that there are a number of economic realities that are not well suited to be recognised via the double entry system of accounting which are nevertheless increasingly important.

Please click to access the full text of Mr Maijoor's speech on the ESMA website.

Regarding the overall event Mr Maijoor spoke at, please see a short summary on the EFRAG website.

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