Summary record of ARC July 2005 meeting

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28 Jul 2005

The European Commission has released the of the Accounting Regulatory Committee (PDF 39k).

At that meeting:

  • The ARC members voted unanimously to endorse, for use in Europe, the IASB's June 2005 Fair Value Option Amendment to IAS 39 and consequential amendments to IFRS 1 and IAS 32.
  • The ARC discussed how European companies should account for emission rights in light of the IASB's withdrawal of IFRIC 3. It was noted that IAS 8 provides guidance on what companies should do if a transaction or event is not specifically addressed in IFRSs. "The CESR representative stated that it was unlikely that they would be looking at companies' accounting treatment of emission rights."
  • Sir David Tweedie, Chairman of the IASB, addressed the ARC on the IASB's work on the convergence of international and national accounting standards. Max Kley, Trustee of the IASC Foundation, gave an update on the completion of the constitutional review. Questions asked by ARC Member States related to:
    • How the decision is made as to which standard (IFRSs or US GAAP) is better.
    • The timetable for convergence and how much change is appropriate in the next few years.
    • Would IASB support a single technical accounting body speaking for Europe rather than the current situation where there are several European bodies.
  • Regarding the joint IASB/FASB performance reporting project, the ARC meeting summary indicates that "some Member States found the proposals for a single statement of comprehensive income unacceptable". In that regard, the IASB chairman said that a final decision on whether to have one or two performance statements has not yet been made.
  • The ARC discussed the issues of consistent application and enforcement of IFRSs in the EU. They considered whether to form a 'roundtable' involving a broad range of stakeholders, including the Commission, IASB/IFRIC, CESR, EFRAG, FEE, the Big Four, national standard setters, and preparers, that could:
    • allow rapid discussion of important accounting issues, thereby minimising the risk of different interpretations of IFRSs across Europe;
    • act as an early warning mechanism for contentious accounting issues; and
    • facilitate cross-border consensus-building, thus minimising subsequent enforcement risks for EU issuers.
    After discussion, the ARC decided to prepare a more detailed paper for the next ARC meeting that would include details on the role and composition of the roundtable, how it would relate to the existing structure of national organisations, and draft terms of reference.
The ARC will meet next on 7 October 2005.

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