The Council emphasises the importance of high quality financial statements for the development of the EU financial markets; and acknowledges the role of the International Accounting Standards Board (IASB) in producing International Financial Re porting Standards (IFRS), as well as interpretations of these standards. The Council notes that the current funding scheme of the IASB expires at the end of 2007, and considers that stable and secure financing must be ensured in order for the IASB to fulfil its function.

The Council welcomes the current private sector efforts to create a broad-based voluntary financing system for the IASB and recognises the need to finalise the financing system in order to prevent any disruption of the operations of the IASB. The Council stresses the importance of the following factors, which must be taken into account in structuring a future financing system of the IASB:

• the financing system would benefit from a very broad base of contributors and the involvement of stakeholders from all parts of the world so as to avoid possible conflicts of interest;
• financing allocations should be clearly determined for all categories of contributors taking into account the precise financing need; and they should be based on objective criteria for contributors from different geographical regions or jurisdictions;
• stakeholders benefiting from the use of IFRS financial statements should be the primary contributors to the financing of the IASB;
• the relevant parties are urged to co-operate in their jurisdictions in relation to the practical modalities relating to the funding of the IASB. The Commission is invited to monitor this process inside the EU and provide its assistance, if needed;
• a financing system based on voluntary contributions should be reviewed after three years of operation in order to see if the system has fulfilled its objectives. The possibility of funding the IASB partly through public means remains to be examined;
• in more general terms, the IASB should continue to:
  • 1. strengthen its governance structure...;
  • 2. strengthen its due process with stakeholders...; as well as
  • 3. ensure that stakeholders are adequately represented in the IASC Foundation, IASB and International Financial Reporting Interpretations Committee (IFRIC) governing bodies, bringing additional technical expertise.