IFRS matters discussed at ARC's 16 March 2007 meeting

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11 Apr 2007

The European Commission has posted a summary of the discussions at the Accounting Regulatory Committee and Contact Committee on 16 March 2007.

Presented below is a brief summary of selected IFRS-related matters discussed. Click to Download the ARC Meeting Summary (PDF 59k).
  • IFRIC 12 Service Concession Arrangements. Views of ARC members were divided regarding whether the ARC should recommend endorsement, including possibly some type of transitional modification of IFRIC 12 for use in Europe. The ARC decided to continue consideration of endorsement at its 6 June 2007 meeting. Meanwhile ARC members were invited to put their views in writing by 30 April 2007.
  • Effective dates of IFRSs. The Commission Services presented the issue of suitable wording for the date of application of IFRSs and IFRICs adopted in Commission Regulations. Two alternatives were discussed. Member States appeared to unanimously support the following approach for the 'date of applicability' clause in the endorsing Commission Regulations endorsing IFRSs and IFRICs: The endorsed IFRS or IFRIC should apply to the company's first financial year beginning after a specific date.
  • Roundtable for Consistent Application of IFRSs in Europe. The Commission Services reported on discussions at the three Roundtable meetings that have taken place to date (May and September 2006, January 2007). Twenty-six issues have been discussed of which five have been concluded as being of common concern regarding consistent application of IFRS in Europe.
  • CESR experience in IFRS implementation. The Committee of European Securities Regulators (CESR) will publish, in 'early summer', a report giving a general overview of issues. Another report with information on about 20 enforcement decisions taken by EU Regulators is expected to be published by the end of March 2007. Some CESR members have also issued reports on IFRS application at a national level.
  • IFRS branding.The ARC discussed an IASB plan to modify IAS 1 to require companies to disclose any differences between full IFRSs and the company's reporting framework if that framework is based on, but not fully compliant with, full IFRSs. The ARC considered such matters as:
    • Whether the differences between IFRSs as adopted by the EU and full IFRSs are likely to be so material that they merit a disclosure in the accounts.
    • Whether the SEC's requirement for reference to full IFRSs is in accordance with the principle of the mutual recognition of EU-US accounting standards.
    • Whether there is a need for a standard formulation for those companies using the carve out (a standardised description of the differences).
  • Equivalence of IFRSs and Third-Country GAAP. The Commission Services described the key points to be covered in its first report to the European Securities Committee and European Parliament under the two legislative measures adopted in late 2006. It will describe the work timetables towards convergence to IFRSs in Canada, Japan, and the US.
  • Simplification of accounting rules for small and medium-sized entities (SMEs) – possible revision of the 4th and 7th Directives. The ARC discussed a range of issues relating to SMEs, including introduction of a category of 'micro entities' and relieving small entities of any requirement to publish annual accounts. Regarding the IASB's Proposed IFRS for SMEs: "The majority of Member States confirmed that the exposure draft of the IFRS SME standard would not be suitable for most SMEs in Europe, as it does not contain enough simplifications. Member States also explicitly expressed their opposition to making a future SME standard binding for non-listed companies in the EU."

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