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2 nd FCM Conference Athens, 22 April 2002 A View on the Future of the Profession: Standard Setting and Globalisation Developments in Professional Accounting Standard Setting – with focus on EFRAG and the accountancy profession by Göran Tidström Chairman EFRAG Supervisory Board President of FEE.

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History

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  1. 2nd FCM ConferenceAthens, 22 April 2002A View on the Future of the Profession: Standard Setting and GlobalisationDevelopments in Professional Accounting Standard Setting – with focus on EFRAG and the accountancy professionby Göran TidströmChairman EFRAG Supervisory BoardPresident of FEE

  2. History • FEE Discussion Paper on a Financial Reporting Strategy within Europe (1999) • IAS or US GAAP • Principle based standards • Emphasis responsibility of management • Require application of careful judgement • Permits development of reporting in relation to business risks • Keep focus on what is important • 2000 Commission Communication EU Financial Reporting Strategy: the Way Forward • 2001 proposed IAS Regulation

  3. EFRAG – Some Facts • Publicly announced 20 March 2001 • Full support and participation of all European organisations: • Preparers: UNICE (+ ERT), EBF, CEA, ESBG, GEBC • SMEs: UEAPME, EFAA • Users: FESE, EFFAS • Accountancy profession: FEE (+ ECG) • Support of national standard setters • Appointments to the Technical Expert Group on 26 June 2001 • Appointment Secretary General end of October 2001 EFRAG is fully operational !

  4. EFRAG – Joint Proposals Main functions: • Proactive contribution to the work of IASB and IFRIC: contribute to and influence IASB standard setting process BEFORE a standard is issued • Technical assessment of IAS/IFRS and SIC/IFRIC interpretation AFTER they are issued (endorsement advice to the Commission) • Advising on changes to the EU Accounting Directives • Implementation guidance (forum to discuss and to coordinate)

  5. EFRAG - Organisation Two levels: • Technical Expert Group (TEG) • Independent experts, no representation • Work in European interest • Transparent work process – due process observed • At present 9 members • Insurance Subcommittee • Supervisory Board

  6. EFRAG – Supervisory Board • Supervisory Board: • 24 members from 14 countries • Chaired by Göran Tidström (FEE President – Sweden) • Guarantee representation of the full European interest • Representation of 10 founding organisations • Legitimacy • Proper geographical spread • Funding EFRAG • Monitoring EFRAG • Separate statement in case of negative advice

  7. EFRAG - TEG • Monthly two days meetings • EFRAG Consultative Forum of Standard Setters • Subjects addressed include: • Due process • Modernisation of the Accounting Directives • Formats • First time application of IFRS • IASB improvements project • Accounting for share based payment • Business combinations • ED preface to International Financial Reporting Standards • ED Amendment to IAS 19 • Endorsement advice on existing IFRS/IAS, SIC/IFRIC interpretations

  8. Nearby Challenges of EFRAG • Endorsement advice • Financial instruments • Share based payment • Insurance (standard 2005 ?)

  9. The New Europe – New challenges • EFRAG is there: • Need to succeed in supporting and influencing IASB • Balanced dialogue with US • Enabling one single set of financial statements for global use • Providing Commission and Member States with unique technical expertise

  10. IFSR by 2005 ! But also • All audits to be conducted in accordance with ISA – audit reports consistents across the EU and follow ISA • Enforcement of IFSR by 2005: FEE Discussed Paper on Enforcement of IFRS within Europe

  11. FEE Discussion Paper on Enforcement – Key Messages • Effective enforcement to be in place by 2005 • Enforcement to be built on effective national enforcement bodies: • No enforcement body  FRRP (review panel) • EU Member States to review arrangements for enforcement • European coordination on enforcement involving all enforcement bodies (securities regulators and review panels) • Enforcement should not result in standard setting Auditors are NOT the first line of defence: it is the responsibility of management to prepare proper financial statements and other information

  12. Next Steps in Addition to Enforcement and Auditing • Corporate governance • Public oversight of the accountancy profession • Auditor independence and objectivity • SMEs

  13. 2nd FCM ConferenceAthens, 22 April 2002A View on the Future of the Profession: Standard Setting and GlobalisationDevelopments in Professional Accounting Standard Setting – with focus on EFRAG and the accountancy professionby Göran TidströmChairman EFRAG Supervisory BoardPresident of FEE

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