This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

EU Parliament committee report on the IASB

  • European Union (old) Image

07 Feb 2008

At its meeting on 29 January 2008, the Committee on Economic and Monetary Affairs of the European Parliament adopted a Report on International Financial Reporting Standards (IFRS) and the Governance of the IASB.

Among the conclusions in the report are:

EU involvement in standard setting

  • The tools the EU has for making its views known to the IASB (ARC and EFRAG) "do not allow it to deal on an equal footing" with countries with more centralised structures (FASB and the SEC in the United States and the ASBJ and FSA in Japan). Accordingly the report calls on the Commission to put forward a proposal for creating a more streamlined EU structure, including possibly abolishing some existing bodies.
  • The European Parliament should be involved earlier in the process for endorsing IFRSs for use in Europe.
  • Carve-outs should be a 'last resort'.
IASB structure and due process
  • 'The IASCF/IASB lack transparency, legitimacy, accountability and are not under the control of any democratically elected parliament or government'. The report recommends that 'a debate should be launched on the conditions for integrating the IASCF/IASB into the system of international governance' such as the IMF, World Bank, or OECD.
  • A public oversight body should be established to oversee the IASCF and the IASB. It should involve 'all IASCF/IASB public stakeholders including in particular legislators and supervisors'. That group would report annually 'on the functioning of international accounting standard setting' and would appoint IASCF trustees.
  • The IASB should strengthen its due process 'so that the views of all IFRS users and investors are taken into account'.
  • The process for appointing members of the IASB, SAC, and IFRIC must be improved.
IASB standard setting
  • IASCF trustees should be more involved in supervising the IASB and its work plan.
  • The European Parliament should be involved 'in drafting the work plan and in setting the priorities and direction of new standard setting projects'.
  • The IASCF constitution should 'ensure that the IASB develops accounting solutions that are not only technically correct but also reflect what is necessary and possible from the point of view of all users (investors and supervisors) and preparers'.
  • IASB should carry out impact assessments for all projects.
  • An accounting standard 'should be drawn up or modified only when 'it has been ensured that there is a clear and beneficial need for it.
  • There are a number of technical issues on IASB's agenda that are of particular concern to the Committee (the report comments on these individually).
  • The IASB should limit the scope of fair-value principle.
  • The proposed IFRS for SMEs 'is far to complicated for SMEs'. The Commission should undertake a comprehensive consultation process to assess the appropriateness of applying the IFRS for SMEs in Europe.
  • The chairpersons of the IASCF and the IASB should report to the European Parliament at least once a year on such matters as work programme, staff decisions, funding, and controversial standards.

Click to view the Report on International Financial Reporting Standards and the Governance of the IASB (PDF 177k).

Related Topics

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.