14 March 2012

FEE commented on EFRAG’s assessments for endorsement of IFRS 10, IFRS 11, IFRS 12, IAS 27 and IAS 28

FEE supports EFRAG providing a positive endorsement advice on the Standards and FEE broadly agrees with the assessments formulated by EFRAG. In FEE's view, endorsement of the Standards should be done swiftly and promptly and at the latest by the end of 2012 to allow sufficient time for implementation.

FEE has also considered EFRAG’s advice to defer the compulsory effective date of the standards by one year - when compared to the IASB effective date – to 1 January 2014 with early adoption permitted. On balance, FEE does not object to this proposal.

FEE has concluded that such a solution will not lead to any significant permanent accounting differences between EU endorsed IFRS and IFRS as adopted by the IASB. In addition, the possibility for European companies to early adopt these standards allows those entities that have a US listing to continue to claim full compliance with IFRS as issued by the IASB, also in 2013. More generally, FEE believes that early adoption should not only be permitted but encouraged for others.

The deferred mandatory effective date will enable European preparers dealing with complex structures or potentially electing to use the currently debated investment entity fair value exemption to have sufficient time to implement the new requirements adequately and make the required assessment.

In FEE's letter to the IASB on IASB Exposure Draft 10 'Consolidated Financial Statements' and IASB Exposure Draft 9 'Joint Arrangements' issued on 14 April 2009 and 24 January 2008, respectively, FEE broadly supported EFRAG’s letters to the IASB.

IFRS 11 and IFRS 10 were separately issued as Exposure Drafts in September 2007 and December 2008, respectively, both of which proposed to make amendments to IAS 27 and IAS 28. The IASB issued the Standards on 13 May 2011.

FEE has been a long-standing supporter of IFRSs which are perceived as high quality and principles-based financial reporting standards. FEE believes that Europe needs to make every effort to prevent the creation of new deviations from IFRS. Furthermore, it needs to avoid to the extent possible any timing differences caused by delays in the endorsement mechanisms. As stated above, the Standards should be endorsed by the end of 2012.

An enhanced due process for the IASB and IFRIC, improved governance of the IASB, and timely and high quality European influence early in the standard setting process should result in international standards and interpretations that are acceptable for Europe. This European influence is expected to be exercised at, or before, exposure draft stage, in particular through EFRAG which has the full support of FEE. As a due process is in place, if appropriate input is provided and considered at both IASB and EFRAG levels, it can be expected that the resulting standards should be suitable for positive endorsement.

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