ESMA believes EU should show leadership by reaffirming its commitment to IFRS

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18 Jul 2018

The European Securities and Markets Authority (ESMA) has responded to the European Commission’s consultation document 'Fitness check on the EU framework for public reporting by companies'. ESMA, consistent with its prior positions, strongly disagrees with the introduction of the possibility to modify the content of IFRS as issued by the IASB.

One of the questions in the fitness check relates to whether it is still appropriate that the IAS Regulation prevents the European Comission (EC) from modifying the content of IFRS as issued by the IASB. ESMA notes that the EC has only recently sought feedback on this question twice (2013 and 2015) and both times the great majority of stakeholders cautioned against introducing such a possibility. The letter adds:

In line with its prior positions, ESMA strongly disagrees with this recommendation, most notably because any European-specific adjustments to IFRS would defy one of the key objectives of the IAS Regulation, namely that financial reporting standards applied by listed issuers are accepted internationally and are truly global standards. In addition, we believe that modifications to IFRS at the European level would hinder the capacity of European companies to compete for financial resources on equal terms in global capital markets. In our view, the different levels of commitment to require IFRS as issued by the IASB around the globe is not a justification for introducing carve-ins. On the contrary, Europe should show leadership in reaffirming its commitment to IFRS. This in turn would increase its ability to influence the development of IFRS, which the EU should continue to actively do as part of the IASB’s due process. 

ESMA also states that the current endorsement criteria should not be changed as the current endorsement process already provides the necessary safeguards to the European public good, by providing the possibility for the non-endorsement of a standard, which is not conducive to European public good.

Please click to access the press release on the ESMA website, which offers a quick overview over ESMA's position as well as access to the letter of response and the completed questionnaire.


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