PIEs as presently defined in EU legislation are:

• entities whose transferable securities are admitted to trading on a regulated market,
• credit institutions,
• insurance undertakings, and
• entities designated by Member States as public-interest entities.

Therefore, Member States have the option to designate undertakings that are of significant public relevance because of the nature of their business, their size or the number of their employees as PIEs and thus expand the number of companies falling under the Accounting Directive or the Audit Directive.

FEE has surveyed PIE definitions in all EU Member States, Iceland, and Norway. The survey showed that

• there is a wide diversity of definitions of PIEs applicable across European countries with some countries having implemented the minimum requirements and others having included a number of other entities to their applicable PIE definition;
• as a consequence, the number of PIEs per European country is very variable;
• in most countries the PIE definition has not changed significantly over recent years; and
• in the context of implementing the 2013 Accounting Directive and the 2014 Audit Directive, Belgium, Germany, the Netherlands, Slovenia, Sweden and the UK are considering extending the definition while Spain and Denmark might see a reduction in scope.

The FEE survey offers several tables and charts showing PIE definitions and the number of PIEs, describes changes that can be anticipated and contains an appendix with the exact definition of a PIE for each of the countries surveyed.

Please click to access the survey on the FEE website.

In the response to the questionnaire, FEE states that the adoption of IFRSs has made companies' financial statements in the EU "significantly more transparent" due to increased disclosure, reduced divergence and increased comparability. As a consequence of increased transparency, comparability and reliability, FEE also sees significantly increased investor protection.

Given all these benefits, FEE believes that the scope of the IAS Regulation should be expanded by making IFRS compulsory for the individual accounts of listed companies on regulated markets and by allowing any company to opt for reporting under IFRS.

FEE also warns that the endorsement criteria for the EU adoption of IFRSs should remain as they are and that moving towards flexible endorsement of IFRSs would in fact be detrimental to Europe: "FEE fundamentally disagrees with 'opening a door' towards more flexibility for the EU in endorsing IFRSs as this would not bring flexibility, but would defeat the very purpose of having global standards."

FEE also warns that any implementation guidance on IFRSs should only come from the IASB and not from the EU or the national level.

Please click to download the full response (link to FEE website).

Note: On 30 October 2014, FEE supplemented its response to the questionnaire with a comment letter stressing once more and elaborating on FEE's views in relation to the endorsement and the enforcement of IFRSs in the EU. The comment letter can be accessed on the FEE website.

As the complexity of IFRS requirements and the length of associated disclosures have led to concerns about a lack of transparency in financial statements, the survey looked into the various components of management's communication with investors to provide an extended review of narrative reporting. As, moreover, 2013 was not a peaceful year in the world of IFRS with many changes to pensions, consolidation and fair value measurement, it also looked at the impact of these changes on financial statements. Lastly, discussions with Swiss listed groups have revealed an increasing interest in Swiss GAAP FER following the conversion of certain high-profile companies to these accounting standards, so the study includes an analysis of the impact of this change on financial statements.

Please click to download IFRS Survey 2014: Financial reporting by listed companies - Spotlight on Swiss trends.

The IFAC classified each recommendation within one of three categories: (1) global consistency for sound financial regulation, (2) financial management, reporting, transparency, and accountability by governments, and (3) effective taxation systems.

Global consistency for sound financial regulation

In this category, the IFAC provides recommendations that will assist in providing a consistent global framework when addressing issues. These recommendations to the G-20 include:

• Continue its momentum for regulatory reform and convergence.
• Governments and regulators adhere to principles of high-quality regulation.
• Strengthening international regulatory organizations’ resourcing and governance arrangements, including a clarification of expectations and responsibilities of standard setters.
• Adoption and implementation of IFRSs, ISAs, IPSASs and the Code of Ethics for Professional Accountants’ requirements for auditor independence.
  
  

Financial management, reporting, transparency, and accountability by governments

In this category, the IFAC provides recommendations that may enhance a government and/or public sector’s financial management practices. These recommendations to the G-20 include:

• Adoption of accrual-based accounting by governments and public sector institutions.
• Increase transparency and accountability in public sector financial management to protect the public and investors in government bonds.
• Require the FSB to encompass public sector arrangements; create a working group within the FSB that examines public sector financial reporting, transparency (including deficit spending), and accountability; direct the FSB to include IPSASs.
  
  

Effective taxation system

In this category, the IFAC recommends an enhancement to the taxation system that applies to all organizations, regardless of size. In addition, the G-20 should support the OECD in its work concerning the transparency and integrity of the taxation system and reporting.

For more information, see the letter to the G-20 on the IFAC’s website.

The CMAC, formerly called the Analyst Representative Group (ARG), consists of a number of professional financial analysts who meet at least three times a year with members of the IASB to provide the views of professional investors on financial reporting issues.

A summary of the agenda for the meeting is set out below:

Agenda papers for the meeting are available on the IASB's website.

Topics focused on areas in financial reporting that are either already on the IASB's research agenda for consideration, that have been brought to the IASB's attention by stakeholders as areas that the IASB should consider addressing or as research that focuses on issues related to the implementation of IFRS. The papers presented were (all links below are to the IASB website):

• Arjan Brouwer, Martin Hoogendoorn and Ewout Naarding: The Conceptual Framework as a guide for future standard setting or only a justification of current practice? An analysis of the asset and liability definitions in the current and new Conceptual Framework
  The paper evaluates whether the IASB's efforts to develop a new Conceptual Framework are aimed at developing a robust and consistent basis for future standard setting, thereby guiding standard setting decisions in complex and controversial areas, or whether the development of the new Conceptual Framework is only a political step aimed at legitimising existing standards.
• Christopher W. Nobes and Christian Stadler: The qualitative characteristics of financial information and managers' accounting decisions: evidence from IFRS policy changes
  The paper offers the first empirical study that uses publicly available data to provide direct evidence about the role of the qualitative characteristics of financial information in managements' accounting decisions.
• Araceli Mora and Martin Walker: The Implications of Research on Accounting Conservatism for Accounting Standard-Setting
  The paper seeks to develop closer links between the academic thinking on conservatism, and the concerns of standard setters. The authors identify and discuss the various forms of accounting conservatism that have appeared in the accounting literature, discuss the role of conditional accounting conservatism in helping to reduce the moral hazard and adverse selection problems that cause capital markets to be imperfect or incomplete, and discuss the empirical literature that attempts to assess the benefits and costs of conservatism.
• Anne Bean and Helen Irvine: Derivatives disclosure in corporate annual reports: bank analysts' perceptions of usefulness
  Responding to mixed evidence on the decision-usefulness of the annual report disclosures for derivative financial instruments to capital market participants, and concerns identified by practice, the paper examines usefulness in a direct study of user perceptions.
• Francesco Mazzi, Paul André, Dionysia Dionysiou and Ioannis Tsalavoutas: Goodwill-related mandatory disclosure and the cost of equity capital
  The paper examines whether goodwill related disclosure, as mandated by IFRS 3 and IAS 36, reduces implied cost of equity capital for a sample of European firms for the period 2008 to 2011.
• Russell Craig, Wally Smieliauskas and Joel Amernic: Fairness of Reporting, Acceptable Accounting Risk and the IASB’s Conceptual Framework: Insights from the Enron Trial
  The paper offers an argument-based analysis of the accounting expert witness testimony given in the 2006 Enron trial that highlights important issues in the reasoning process underlying financial reporting.

Please click for more research and education information on our dedicated website.

Chairman Hoogervorst highlighted that in a recent IASB survey on the use of IFRS around the world, 114 out of 138 jurisdictions have adopted IFRS with another 12 allowing the use of IFRS. He noted that with the increasing use of IFRS globally, investors are better prepared to effectively evaluate and compare the performance of companies. However, he mentioned that additional work is necessary in order to provide investors a more accurate assessment of a company and used leases as an example to stress his point that accounting standards are key component of corporate governance.

For more information, see his speech on the IASB’s website.

The IFRS Foundation Constitution requires the IFRS Foundation Trustees to undertake a review of the entire structure of the IFRS Foundation and its effectiveness every five years. After Constitution reviews in 2003-2005 and 2008-2010, the IFRS Foundation Trustees announced in February 2014 that they intend to start their next review of the structure and effectiveness of the IFRS Foundation in 2015. Purpose of the session at the Advisory Council meeting is to update the Advisory Council members on the progress of preparatory work for the review and to seek initial views and suggestions from Advisory Council members.

The paper available on the IASB website details at length the outcomes of previous reviews. It also mentions, that the last strategy review (2010-2012) covered many issues that would be part of a Constitution review. The paper states: "Trustees do not propose to re-run whole of that review" and "Existing three-tier structure supported by constituents in the last Strategy Review: do not propose to revisit".

Among the suggested topics for the upcoming review are:

• Structure
  • operation of the current structure
  • effectiveness of the Interpretation Committee’s more prominent role since 2012
  • output of the 2013 self-assessment of the Advisory Council
• Remit
  • public sector accounting
  • relationship with wider reporting
  • relationship between purpose of financial reporting standards and other public policy objectives
• Other
  • funding
  • governance procedures
  • assessing how the IFRS Foundation matches up against other standard-setting and regulatory organisations

As communicated earlier, the review will also include a review of the optimal size of the International Accounting Standards Board (IASB).

Not mentioned among the topics for the upcoming Constitution review is a review of the Accounting Standards Advisory Forum (ASAF), even though the ASAF's Terms of Reference require such a review 'two years after the establishment of the group'.

Given this more limited set of topics, the Trustees believe that unlike during the earlier Constitution reviews only one round of public consultation will be needed this time. It is expected to take place in first half of 2015.

Please click for the agenda paper for the Advisory Council meeting on the IASB website.

Since 2010, ISAR has been developing an Accounting Development Tool for high-quality corporate reporting. The findings of pilot tests of the tool and discussions of the findings at ISAR sessions reflected that countries require further guidance on building efficient mechanisms for the monitoring of compliance and enforcement. At the last meeting, ISAR therefore proposed to focus its deliberations during the thirty-first session on such mechanisms.

In preparation for the meeting a paper Key foundations for high-quality corporate reporting: Good practices of monitoring and enforcement, and compliance mechanisms has been made available to facilitate the discussions on this topic. It describes the key elements that need to be considered when building efficient monitoring and enforcement systems for companies, audit firms and professional accountants, highlights standards and guidance issued by international and regional bodies and selected national good practices and discusses the main challenges faced by countries in their efforts to establish efficient mechanisms for the monitoring of compliance and enforcement.

Please click for the following information on the UNCTAD website:

• Key foundations for high-quality corporate reporting: Good practices of monitoring and enforcement, and compliance mechanisms
• detailed agenda for the discussion of the points in the paper

Please note that the paper is also available in Spanish, Chinese, Russian, and Arabic. To access these versions, please go to the general homepage of the thirty-first ISAR meeting.