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Accountancy Europe responds to the EU fitness check

  • Accountancy Europe Image
  • European Union Image

17 Jul 2018

Accountancy Europe has responded to the European Commission’s consultation document 'Fitness check on the EU framework for public reporting by companies'. While the response fully recognises the legitimacy of the Commissions concerns regarding sustainability and long-term investments, Accountancy Europe is not convinced that additional changes to IFRSs would address these concerns.

As reported earlier, the document seems oddly tilted against the use of IFRSs as issued by the IASB asking for example whether European listed companies are still best served by applying IFRS or whether the European Commission should be given the power to modify IFRSs as issued by the IASB. Accountancy Europe clearly warns against this. The response states:

It is still appropriate that the IAS Regulation prevents the Commission from modifying the content of IFRS. We call for great caution in permitting the EU to change specific aspects of IFRS standards published by the IASB ('carve-in') before transposing them into EU law.

The reasons the response cites are:

  • Fear of an uncontrollable and unpredictable trend that would lead to EU-IFRS;
  • isolating the EU from global capital markets would hinder investments (including long-term investments), create confusion, and increase the cost of capital;
  • concerns regarding the current position of foreign private issuers in the US;
  • decrease of EU influence on the international standard-setter, which would in turn make the issuance of international standards that do not meet the EU endorsement criteria more likely;
  • loss of all benefits that result from international comparability and transparency.

As additional points on international financial reporting Accountancy Europe also states that listed entities without subsidiaries should also be required to apply IFRSs, the option to apply IFRSs should be available at company level (not member state level), the EU endorsement criteria should not be changed, and the IASB's Conceptual Framework should be endorsed for use in the EU.

Please click to access to the letter of response and the completed consultation questionnaire on the Accountancy Europe website.

 

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