ESMA comment letter on the proposed ASAF

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30 Jan 2013

The European Securities and Markets Authority (ESMA) has submitted a letter of comment to the IFRS Foundation on its Invitation to Comment 'Proposal to Establish an Accounting Standards Advisory Forum'. ESMA believes that the focus of the proposed ASAF should not be detailed standard-setting discussions but endorsement and enforcement.

The IFRS Foundation issued the proposals for the creation of the Accounting Standards Advisory Forum (ASAF) on 1 November 2012. Creation of such a forum was recommended by the Trustees' strategy review to provide technical advice and feedback to the IASB from the standard-setting community.

ESMA supports the creation of such a forum that would offer a platform for working with national accounting standard-setting bodies and regional bodies involved with accounting standard-setting. However, ESMA believes the focus of the forum should not be discussing technical questions in detail and expressly warns of the ASAF becoming a "shadow board". ESMA believes the ASAF should advise the IASB on questions of IFRS endorsement:

We believe that the Foundation should clarify whether the purpose is to liaise with national standard-setters or with the bodies that bear the ultimate responsibility for the endorsement of IFRSs into national or regional law. ESMA is of the opinion that the focus should be on bodies with the ultimate responsibility for endorsement. In this way, the ASAF’s membership should consist of the national and regional bodies representing the public interest and that are ultimately responsible for the endorsement of IFRS.

ESMA also believes that the suggested commitment regarding the use of IFRSs should be supplemented by a commitment regarding consistent application and a corresponding enforcement. Regarding the suggested size of the forum, ESMA sees no need for an increase in size and, in the light of the shift in focus ESMA is suggesting, ESMA also believes that there is no necessity for ASAF members to send a technical expert to stand in for them or to bring a technical expert along.

ESMA has also submitted a letter of comment arguing along the same lines to the European Financial Reporting Advisory Group (EFRAG) regarding its draft comment letter on creating the forum.

Please click for access to the two letters on the ESMA website:

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