Prior to the adoption of IFRS in 2005, the EU did not have a common financial reporting language, despite many years of trying without success. The adoption of IFRS has brought positive effects in terms of the quality, transparency and comparability of financial reporting, not only within the EU, but also globally, with no less than 114 countries now mandating the use of IFRS for all or most public companies and other major economies (notably Japan and the USA) permitting its use in certain circumstances.
If jurisdictions such as the EU were to make modifications, they would not be adopting IFRS and so would lose the benefits of using the globally-accepted language of IFRS. EU companies would no longer have the benefit of the global financial reporting passport that IFRS provide, including their ability to access international capital markets using their IFRS financial statements, without reconciliation to local Standards. Investors would be deprived of comparable accounts and therefore essential information
The IFRS Foundation believes that IFRS as developed by the independent IASB can play an important role in the agenda priorities for the new Commission. The use of a single set of financial reporting requirements is essential to the successful achievement of the proposal for a Capital Markets Union. Given the global nature of capital markets and the need for comparability within the EU market to mirror internationally-accepted best practice, only IFRS can provide those requirements. The transparent financial reporting provided by companies reporting under IFRS helps participants in capital markets to make more efficient and informed resource allocation and other economic decisions, and makes investment more attractive to capital providers. Having a comparable and familiar financial reporting language is, therefore, a vital feature to encourage the investment that is so necessary for the growth that the Commission seeks for the EU.
Press release
Comment letter
© IASB - International Accounting Standards Board
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article