European Commission consults on the impact of IFRSs in the EU

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07 Aug 2014

The European Commission (EC) has launched a public consultation on the impact of International Financial Reporting Standards (IFRSs) in the EU. Responses are requested by 31 October 2014 after which the results will summarised into a technical report that will feed into a larger evaluation report to be presented by the EC to the EU Council of Ministers and the European Parliament.

The 'IAS Regulation' (Regulation 1606/2002) (link to EUR-Lex website) requires EU companies with securities admitted to trading on a regulated market at their year-end to prepare their consolidated financial statements in accordance with IFRSs as adopted by the EU. The IAS Regulation also gives member states an option to permit or require the use of IFRSs as adopted in the EU in other cases such as within individual financial statements of listed companies and the consolidated and individual financial statements of unlisted companies.

The EC is currently evaluating whether the initial objectives of the IAS Regulation are still relevant and to identify areas for improvement in the functioning of the IAS Regulation, if needed. This review is required to be completed by 31 December 2014 by Article 9.2 of Regulation 258/2014.

In June 2014, the EC announced the membership of an informal 'Expert Group on the evaluation of the IAS Regulation' that is intended to advise and assist the EC in conducting the retrospective evaluation of the IAS Regulation. The public consultation will contribute to part of the EC's evaluation process.

The evaluation of the IAS Regulation is also intended to integrate the recommendations of the special advisor Mr. Maystadt on how the EU's contribution to International Financial Reporting Standards can be reinforced and how the governance of the European bodies involved in developing these standards can be improved. The evaluation is designed to complement Mr. Maystadt's recommendations by providing factual data about the IFRS experience in Europe so far.

The public consultation seeks views from "all citizens and organisations" but especially "capital market participants and companies preparing financial statements or using them for investment purposes (whether or not they use IFRS)". Respondents are asked to complete a questionnaire giving their views on aspects such as:

  • The continued relevance of the initial objectives of the IAS Regulation;
  • The scope of the IAS Regulation;
  • Costs and benefits of the IAS Regulation;
  • The current EU endorsement mechanism and criteria;
  • The quality of IFRS financial statements; and
  • Enforcement of IFRSs.

The press release and the full consultation are available on the European Commission website.

Update 28 October 2014: The deadline for responding to the consultations has been extended to 7 November 2014. Please see the updated information on the EC website.

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