European Commission Consults on the Impact of IFRSs in the EU

International Financial Reporting Standards (IFRS) are global accounting standards governing the presentation and valuation of financial information. International Accounting Standards Board (IASB) is the global body of professional accountants that has responsibility of setting and reviewing International Financial Reporting Standards.

The European Commission (EC) has decided to receive general public opinion on the effect of International Financial Reporting Standards in the Europe. The interested parties are requested to submit their opinions by 31 October 2014. After the opinions are received, a summary of the results will be prepared and will be compiled in the form of technical report. This technical report then will form part of full assessment report that will be presented by European Commission to European Council of Ministers and European Parliament.

The framework relating to International Accounting Standards (Regulation 1606/2002) obliges European entities whose shares are listed on a controlled exchange for public trading at the end of reporting year to formulate their consolidated financial statements as per the requirements of International Financial Reporting Standards as accepted by the Europe. The International Accounting Standards framework also provides an option to the concerned countries to allow or require complying with requirements of International Financial Reporting Standards as accepted by Europe in scenarios such as stand-alone financial statements of public firms and the consolidated and stand-alone financial statements of unlisted entities.

The European Commission is assessing, at the moment, whether the primary goals of International Accounting Standards framework are still pertinent and to detect areas for betterment, if required. This assessment must be finished by 31 December 2014.

In June 2014, European Commission has stated that it will include an expert group regarding the assessment of International Accounting Standards framework. The main purpose of the group is to consult and help European Commission in assessment of International Accounting Standards framework. The public opinion will also form part of assessment.

Mr. Maystadt, special advisor, has provided suggestions on how the Europe’s involvement in IFRS can be strengthened and on how the governance of entities tangled in developing standards can be made better.

The European Commission seeks opinion from public in general but specially from capital markets contributors and from entities who prepare financial statements.