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IFRS in Europe – Background information

European Union

This page contains background information about the use of IFRSs in Europe and the various organisations and bodies involved in financial reporting in Europe.

IFRS in Europe chronology

You can access our articles related to Europe for each calendar year by accessing the links below:

Member States of the European Union

Three additional countries are members of the European Economic Area, though not the EU. They are committed to follow EU Directives, including the Accounting Directive:

 

EU Accounting Directive and IAS Regulation

Adoption of IFRSs for use in the European Union

The EU Accounting Regime requires that IFRSs be adopted individually for use in the European Union. The adoption process is sometimes referred to as 'endorsement'. The process is as follows, as described by the European Commission – click for Diagram Prepared by the Commission (PDF 85k):
  1. The IASB (the International Accounting Standards Board) issues a standard.
  2. EFRAG (the European Financial Reporting Advisory Group) holds consultations with interest groups
  3. EFRAG delivers its advice to the Commission whether the standard meets the criteria of endorsement. EFRAG also prepares in cooperation with the Commission an effect study about the potential economic effects of the given standard's application in the EU.
  4. Based on the advice of EFRAG, the Commission prepares a draft endorsement Regulation. The adoption of the Regulation follows a regulatory comitology procedure with scrutiny, in accordance with Articles 5a and 8 of the Council Decision 1999/468. This means in practice that:
  5. ARC (Accounting Regulatory Committee), set up in accordance with Article 6 of the IAS Regulation votes on the Commission proposal. The qualified majority rule applies. If the vote is favourable (which is the case for the vast majority of the standards to be endorsed),
  6. The European Parliament and
  7. The Council of the European Union have 3 months to oppose the adoption of the draft Regulation by the Commission.
  8. If the European Parliament and the Council give their favourable opinion on the adoption or the 3 months elapsed without opposition from their side, the Commission adopts the draft Regulation. After adoption, it is published in the Official Journal and enters into force on the day laid down in the Regulation itself.

Full text of IFRSs adopted in Europe

Because IFRSs have the force of law in Europe, the full text of the IASs, IFRSs, and Interpretations adopted by the European Commission is published in the Official Journal of the European Union. Please note that 'full text' means the body of the standard and does not include the introduction, implementation guidance, or basis for conclusions. All of the standards and interpretations are available in all of the official EU languages in the Official Journal.

Accounting Regulatory Committee (ARC)

The Accounting Regulatory Committee (ARC) is composed of representatives from Member States and chaired by the European Commission. The Committee was set up pursuant to the requirements of Article 6 of the IAS Regulation (EC/1606/2002). The function of the Committee is a regulatory one and entails providing an opinion on Commission proposals to adopt (endorse) an international accounting standard as envisaged under Article 3 of the IAS Regulation.

Accounting Directive Committee (ADC)

The ADC assists the Commission in adopting implementing measures for Directive 2013/34/EU and deals with other issues related to accounting rules.

    European Financial Reporting Advisory Group (EFRAG)

    The European Financial Reporting Advisory Group (EFRAG) is an organisation established by a broad group of organisations representing the European accounting profession, preparers, users, and national standard-setters with the following goals:
    • to provide technical expertise to the European Commission concerning the use of IAS within the Europe,
    • to participate in IASB's standard setting process, and
    • to coordinate within the EU the development of views concerning international accounting standards.

     

    EFRAG Contact information:
    European Financial Reporting Advisory Group
    35 Square de Meeûs
    1000 Brussels, Belgium
    Telephone: + 32 (2) 510 0888
    Fax: + 32 (2) 510 0885
    Email: info @ efrag.org
    EFRAG Website: http://www.efrag.org

    European Securities and Markets Authority (ESMA)

    The European Securities and Markets Authority (ESMA) is an independent EU Authority that contributes to safeguarding the stability of the European Union's financial system by ensuring the integrity, transparency, efficiency and orderly functioning of securities markets, as well as enhancing investor protection.

    In particular, ESMA fosters supervisory convergence both amongst securities regulators, and across financial sectors by working closely with the other European Supervisory Authorities competent in the field of banking (EBA), and insurance and occupational pensions (EIOPA).

    ESMA's work on securities legislation contributes to the development of a single rule book in Europe. This serves two purposes; firstly, it ensures the consistent treatment of investors across the Union, enabling an adequate level of protection of investors through effective regulation and supervision. Secondly, it promotes equal conditions of competition for financial service providers.

    As part of its role in standard setting and reducing the scope of regulatory arbitrage, ESMA strengthens international supervisory co-operation. Where requested in European law, ESMA undertakes the supervision of certain entities with pan-European reach.

    Finally, ESMA also contributes to the financial stability of the European Union, in the short, medium and long-term, through its contribution to the work of the European Systemic Risk Board, which identifies potential risks to the financial system and provides advice to diminish possible threats to the financial stability of the Union. ESMA is also responsible for coordinating actions of securities supervisors or adopting emergency measures when a crisis situation arises.

    ESMA was created by the European Commission in January 2011 and is the successor to the Committee of European Securities Regulators (CESR). CESR was the successor to the Forum of European Securities Commission (FESCO). All of the FESCO's and CESR's standards and work have been taken over by ESMA.

    ESMA Contact information:
    European Securities and Markets Authority
    103 Rue de Grenelle
    75007 Paris, France
    Telephone: + 33 1 58 36 43 21
    Fax: + 33 1 58 36 43 30
    Email: info @ esma.europa.eu
    ESMA Website: http://www.esma.europa.eu

      European Commission (EC) contact information

      Commission of the European Communities
      Directorate-General Internal Market and Services
      Mail: SPA2 03/205, 1049 Brussels, Belgium
      Street address: Rue de Spa (Spastraat) 2, 1000 Brussels, Belgium
      Telephone: +32 2 299 1111
      Fax: +32 2 299 3081
      Email: markt-f4 @ cec.eu.int
      Website: European Commission Accounting News

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