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Reference to reporting framework in Europe

  • FEE (Federation of European Accountants - Fédération des Experts-comptables Européens) (lt green) Image

05 Jan 2006

The European Federation of Accountants (FEE) has urged the European accounting profession to use a standard reference to the financial reporting framework in the EU in their audit reports and in the basis of preparation note to financial statements of companies using 'endorsed' IFRSs.

FEE notes that the European Commission has adopted the following wording (reported in our news story of 23 December 2005): "in accordance with International Financial Reporting Standards as adopted by the EU" or "in accordance with IFRSs as adopted by the EU". FEE also urges that the following three disclosures be included:
  • It should be strongly encouraged to provide an explanation in the notes to the accounts as to how companies' accounting policies depart from full IFRS to enable investors to compare the results of companies within and outside the EU.
  • It should be encouraged that companies also state that they are in compliance with full IFRS (additional disclosure, not as the legal financial reporting framework).*
  • It should be strongly encouraged to provide an explanation of how companies are in compliance with 'International Financial Reporting Standards as adopted by the EU' or 'IFRSs as adopted by the EU' and full IFRS as issued by the IASB in cases where the two frameworks are recognised to be different.
*In this regard, paragraph 14 of IAS 1 Presentation of Financial Statements as endorsed for use in Europe states: "An entity whose financial statements comply with IFRSs shall make an explicit and unreserved statement of such compliance in the notes." Click for (PDF 157k).

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