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EU ENDORSEMENT PROCESS Technical Assessment of IFRS by EFRAG

ASEM IFRS SEMINAR Shanghai, 25-26 March 2006 . EU ENDORSEMENT PROCESS Technical Assessment of IFRS by EFRAG. Reinhard Biebel, EFRAG Deputy Technical Director. STRUCTURE. EFRAG Endorsement Process Convergence – Roadmap Major Projects. EFRAG. EFRAG Objectives. Main objectives :

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EU ENDORSEMENT PROCESS Technical Assessment of IFRS by EFRAG

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  1. ASEM IFRS SEMINAR Shanghai, 25-26 March 2006 EU ENDORSEMENT PROCESS Technical Assessment of IFRS by EFRAG Reinhard Biebel, EFRAG Deputy Technical Director

  2. STRUCTURE • EFRAG • Endorsement Process • Convergence – Roadmap • Major Projects

  3. EFRAG

  4. EFRAG Objectives Main objectives: • Proactive contribution to the work of IASB and IFRIC BEFORE a standard is issued • Technical advice to the EU Commission AFTER issuance • Advise on changes to the EU Accounting Directives • Forum to discuss and to coordinate with NSS

  5. EFRAG Objectives • Additional Objectives: • European co-ordination with National Organisations • Stimulate thought leadership - PAAinE • Challenge IASB + FASB • Working Arrangement EC - EFRAG

  6. Founding Fathers

  7. INSURANCE WG SME JWG REV REC WG FIWG CONCESSIONWG VENTURE CAP WG EFRAG - STRUCTURE SUPERVISORY BOARD TECHNICAL EXPERT GROUP - TEG EFRAG SECRETARIAT

  8. Proactive Accounting Activities in Europe

  9. PAAinE • Objectives: • High quality proactive input to IASB + FASB • Improve accounting in Europe • Create debates in Europe at an early stage • More consistent messages to IASB • Involvement in the convergence work • Monitor work of IASB + FASB • Create thought leadership

  10. PAAinE Conceptual Framework - France Pensions - UK Equity/Liability split - Germany Performance Reporting – Spain/EFRAG Plus: Revenue Recognition

  11. PAAinE EFRAG SWEDEN POLAND Influence! GERMANY HOLLAND SPAIN FRANCE UK

  12. ENDORSEMENT PROCESS

  13. ENDORSEMENT PROCESS • Big change in the EU: • Private Sector – Not Law • Detailed Standards • Continous Changes • More Transparent Reporting • 2005 First Year IFRS Compliance • Regulators/Enforcement

  14. ENDORSEMENT PROCESS EU criteria for endorsement TRUE AND FAIR VIEW UNDERSTANDABLE, RELEVANT, RELIABLE AND COMPARABLE EUROPEAN PUBLIC GOOD

  15. Not endorsed Not to be used? ENDORSEMENT PROCESS Implications of Endorsement Endorsed IFRS Must use

  16. ENDORSEMENT PROCESS • Why is it needed? • Better and faster than parliaments • Technical experts involved • Transparent Due Process - Consultation • However: • The system takes time – but improving • Political level involved • Comes after the fact

  17. ENDORSEMENT PROCESS Endorsed as of March 2006 • All IASs issued in 2001 except for IAS 39 • Improvements project of 13 standards • IFRS 1, 2, 3, 4, 5, 6, 7 and IFRIC 1, 2, 4, 5, 6 • Amendment SIC 12, IAS 1, 19, 39, IFRS 4 • IAS 39 carved-out and FV Option • one carve-out is remaining...so far

  18. ENDORSEMENT PROCESS Not yet endorsed • IFRIC 7 Hyperinflation (ARC yes) • Amendment to IAS 21 (ARC yes) • IFRIC 8 Scope of IFRS 2 (ARC in May) IFRIC 3 will not be endorsed, withdrawn by IASB

  19. Convergence

  20. AUS GERMANY SPAIN UK FRANCE CONVERGENCE US/FASB CANADA? JAPAN IASB

  21. CONVERGENCE US GAAP IAS/IFRS GAAP CONVERGENCE GLOBAL GAAP JAPAN? CHINA? Convergence Meetings IASB - EFRAG

  22. Major Projects

  23. IASB WORK PROGRAMME MANY CHANGES MANY PROJECTS

  24. IASB WORK PROGRAMME IASB/ FASB PROJECTS BUSINESS COMBINATIONS INCOME TAX SHORT TERM CONVERGENCE GOVERNMENT GRANTS SEGMENT REPORTING OTHER JOINT PROJECTS PERFORMANCE REPORTING REVENUE RECOGNITON FRAMEWORK

  25. EFRAG MAJOR PROJECTS IFRS for SMEs EFRAG KEY PROJECTS Performance Reporting Service Concessions Insurance Contracts Financial Instruments Revenue Recognition Plus: Fair Value Measurement

  26. EFRAG THE EUROPEAN FOCAL POINT OF ACCOUNTING www.EFRAG.org

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