The non-paper on the European public good criterion notes that neither the European legislation nor the case law of the Court of Justice provide a definition of this criterion in the context of the IAS Regulation. It therefore offers some flexibility in practice. The non-paper therefore concludes that assessing whether a standard meets the criterion of public good should in general take into account financial stability, EU economic development, competitiveness of European undertakings, and added value for the EU. However, the non-papers states that the above mentioned should not be considered, in any case, as exhaustive. In the context of the endorsement procedure of international accounting standards it should be decided on a case by case basis which of these particular elements EFRAG should focus on in its analysis when assessing the public good criterion and whether any other factors (e.g. long-term investment) should be considered.

The non-paper on the true and fair view criterion notes that European legislation does not provide a distinct definition of the principle of true and fair, but the Court of Justice has reviewed the principle in its case-law over the years. The Court refers to true and fair as “fundamental principle” and “primary objective” of the Accounting Directives. Therefore, the non-paper concludes that it is reasonable to assume that the true and fair view principle is the overarching principle. The supremacy of the principle means that in exceptional cases other general principles must be departed from in order to give the true and fair view of the assets and liabilities.

Please click to access the two papers on the European Commission website:

• Non-paper on the European public good criterion
• Non-paper on the true and fair view criterion