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Final proposal to restructure EFRAG

  • EFRAG (European Financial Reporting Advisory Group) (dk green) Image

11 Dec 2008

Following public consultation, the European Financial Reporting Advisory Group (EFRAG) has published a plan to restructure itself with the goal of 'more influence for EFRAG in international standard-setting process'.

The final plan is based on proposals published in July 2008 (see our 23 July 2008 news story). The proposals envision a new EFRAG structure as shown in the diagram below. The report states that, to increase its influence on the IASB, 'EFRAG needs to place more emphasis on developing its own research and discussion papers at an early stage of the IASB's consideration of the topics concerned or even before they figure on the IASB agenda'. Among the changes to the current structure being proposed are:

  • A new nine-member Planning and Resource Committee (PRC) including four National Standard Setters (NSS), the EFRAG Technical Expert Group (TEG) Chair, and at least two Supervisory Board (SB) members. The PRC will set the agenda for proactive work, provide guidance on the allocation of resources to proactive projects, and monitor progress. The PRC will negotiate a Memorandum of Understanding with each of the NSS as a condition for membership.
  • An informal Coordination Group, consisting of a wider range of NSS, will also be set up (not shown in the diagram below).
  • The SB will have 17 members, including four with public policy experience (see next bullet) plus observers from the EC and CESR.
  • Four members of the SB must be experienced in public policy, either at a national or European level. They will not represent particular organisations.
  • New Governance and Nominating Committee (GNC) of the General Assembly (GA) in which some National Funding Mechanisms (NFM) have a seat. The GNC will have seven members – four appointed from among GA members and three from among the National Funding Mechanisms (NFM). The GA will continue to consist of representatives of the European organisations that are members of EFRAG.
  • An informal Consultative Forum for NFM as a process to coordinate the NFM in the various countries (not shown in the diagram below).
  • A new Consultation Group, replacing the current Advisory Forum. It will meet at least annually.
  • A three-tier funding model: European organisations, NFMs and the European Commission. The report states that EFRAG has not been able to be proactive 'due to limited resources'.

The current Technical Expert Group of nine to twelve voting members, plus three non-voting NSS chairs, will continue. TEG responsibilities will be:

  • Provide input to the IASB and IFRIC
  • Develop proactive discussion papers
  • Monitor ongoing IASB activities and provide feedback to the IASB
  • Issue endorsement advice to the EC on final pronouncements issued by the IASB
  • Issue effect study reports

The plan is described as a 'proposal'. It does not include a plan for or timing of transition.

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