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Second Deloitte response to ad personam mandate on non-financial reporting standard setting

Published on: 06 Jan 2021

The Deloitte firms in the European Union have responded to the consultation document on the ad personam mandate on potential need for changes to the governance and funding of EFRAG in the context of possible changes to non-financial reporting by companies.

We reiterate that we support actions in favour of global initiatives because the issues to be addressed are global issues and need global solutions. Businesses have global supply and value chains, face global risks and have global investors. Most importantly, issues such as climate change and achieving the UN Sustainable Development Goals require international solutions.

With respect to the Consultation document:

  • We are supportive of the proposals in relation to EFRAG’s new mission and due process as described in the document.
  • We support retaining the current infrastructure and role for the financial reporting.
  • We support the idea of an enlarged General Assembly that covers all EFRAG’s activities.
  • We support the proposals for an EFRAG (Supervisory) Board, which would look after the governance and administration of the overall organisation, as well as the oversight of all the EFRAG bodies.
  • We support the financial reporting and non-financial reporting Boards having the ultimate decision-making powers on financial reporting and non-financial reporting issues respectively.
  • For non-financial reporting, to the extent that EFRAG is entrusted with standard-setting activities, the non-financial reporting Board is likely to require enhanced technical competences, as compared to the current EFRAG Board.
  • Collecting the views of EU Member States /national public authorities on non-financial reporting will be important.
  • With respect to the EU institutions and agencies, we suggest their participation in an observer capacity with speaking rights, at each level of the EFRAG organisation, where this would be relevant.
  • With respect to the representation of the private sector and civil society, we are strongly in favour of a public-private partnership for EFRAG.
  • We support close involvement and/or cooperation between EFRAG and the identified key international non-financial reporting standard-setting organisations.
  • To enable the EFRAG structure to achieve its possible mission for non-financial reporting standard-setting successfully, it will need additional competent operational resources at the EFRAG staff level.
  • Finally, considering the proposed governance structure and the need for long-term finance, as well as the fact that the objective would be to possibly develop non-financial reporting standards, our view is that the European Commission and the Member States should provide the majority of the funding.

Please click to download our full comment letter below.

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