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Provisional ECON report recommends annual assessment of the EU's funding for the IASB

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Oct 04, 2013

On the Web site containing the provisional versions of reports recently voted on in the Committee on Economic and Monetary Affairs (ECON) of the European Parliament, the "Report on the proposal for a regulation of the European Parliament and of the Council on establishing a Union programme to support specific activities in the field of financial reporting and auditing for the period of 2014-2020" has been posted. Among other issues the report deals with the funding of the IASB.

The draft report, which went through its first reading, maintains that it is important to ensure that the interests of the European Union are respected and that global accounting standards are of high quality and compatible with Union law. Therefore, ECON believes the program for supporting specific activities in the field of financial reporting should be used to ensure that public money contributed towards the functioning of international accounting and auditing standard setting, "and in particular to the IFRS Foundation, EFRAG, and the PIOB," is spent in accordance with the public interest and responding to European Union needs.

To this end the draft report contains the following suggested amendment:

Those funding arrangements depend on whether the IFRS Foundation and IASB implement the proposals of the Union regarding their governance; whether the Union accounting concepts, in particular with regard to 'prudence' and the requirement for the 'true and fair view' are appropriately considered in the revision of the Conceptual Framework; whether the IASB decides not to include those concepts in the revised Conceptual Framework; and whether the IASB provides reasons for its decision, including publishing the details of the jurisdictions, non-governmental organisations, undertakings or other stakeholders, which objected to those concepts.

Moreover, ECON suggests moving from giving six years of funding in one go to an annual assessment of whether certain criteria are fulfilled and releasing the money in stages:

Financing under the Programme shall be provided in the form of operating grants, shall be awarded on an annual basis, and shall be conditional on compliance with criteria relating to the objectives and content of the standards, and with criteria concerning developments in Union governance, namely regarding EFRAG, the IFRS Foundation and IASB.

The ECON proposed amendments will now go to official trialogue — tripartite meetings attended by representatives of the European Parliament, the Council and the Commission aimed at getting agreement on a package of amendments acceptable to the Council and the European Parliament.

Please click for access to the provisional version of the report on the European Parliament Web site.

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