12 November 2013

Philippe Maystadt presents his recommendations for enhancing the EU's role in international accounting standard-setting

In March 2013, Commission Barnier mandated Philippe Maystadt to examine ways of reinforcing the EU's contribution to International Financial Reporting Standards (IFRS) and improving the governance of the European bodies involved in developing these standards (IP/13/242). Mr Maystadt's report is part of a broader debate on accounting standards, which also takes into consideration international developments in this field and the revision of the Regulation on the application of the IFRS, planned for the end of 2014.

Mr Maystadt held a series of interviews and consultations before drafting his report, which he will present to Finance Ministers at the ECOFIN Council meeting on 15 November 2013.

Mr Barnier made the following statement in this respect: "The experience of the last few years has shown that accounting standards are more than a mere language convention. They can have an impact on the stability of financial markets, by influencing the actors’ behaviour on those markets. I mandated Mr Maystadt to evaluate whether the system for the adoption of the IFRS put in place by the European Union was effective and enabled the EU to play its full role in the debate. I have taken note of his excellent report. I plan to discuss it with the EU Finance Ministers at the ECOFIN Council of 15 November and shortly with the European Parliament. I am particularly keen that Mr Maystadt's recommendations should be implemented swiftly so that our undertakings and the users of their financial statements can as soon as possible benefit from high-quality international accounting standards. This work will allow the EU to better organise itself to ensure that the needs of its markets are fully taken into account in the international accounting debate, excessively focussed these last few years on the objective of convergence with the US accounting standards (the US GAAP)."

Mr Maystadt said: "The financial crisis raised the awareness of numerous economic stakeholders and political decision-makers on the potential impact of accounting standards on the results made public by companies and on the economy as a whole. I found that the aim of a single international accounting framework, i.e. the IFRS, was largely confirmed. However, the European Union's influence in international accounting standard-setting is reduced because it is diffuse. I recommend setting up a structure that is able to carry out a strategic analysis of the economic impact of the standards and better coordinate the European positions on this matter".

Mr Maystadt proposes taking a three-fold approach:

1) He suggests maintaining a "standard-by-standard" adoption procedure, including the possibility of accepting or refusing a standard issued by the IASB (International Accounting Standards Board). Any move to introduce greater flexibility (such as amending or adapting a standard) should be strictly regulated (precise criteria and conditions) in order not to impede the aim of applying global standards.

Mr Maystadt proposes adding adoption criteria to the Regulation on the application of the IFRS (not endangering financial stability and not hindering the economic development of the region). Otherwise, the Commission could clarify the interpretation of the criterion specifying that a standard should contribute to the public interest.

2) Mr Maystadt has identified three options for strengthening the European Union's influence in international accounting standard-setting:

(a) reorganising the current EFRAG (the European Financial Reporting Advisory Group) to increase its legitimacy and representativeness.

(b) transferring the tasks handled by EFRAG to the European Securities and Markets Authority (ESMA).

(c) creating an Agency of the European Union.

For various reasons explained in the report, in particular to ensure speedy implementation, he recommends option (a).

3) Lastly, Mr Maystadt proposes that the Accounting Regulatory Committee, ARC, further develop its dialogue with EFRAG at an earlier stage in the process, in order to be more effective in bringing influence to bear on the activities of EFRAG and the IASB.

Full speech

Text of the report: Should IFRS-standards be more European?

EIOPA-response to Maystadt report, published 14.11.13

ESMA-response to Maystadt report, published 14.11.13

EBA-response to Maystadt report, published 18.11.13

ECOFIN-Council

On 15 November, the Council took note on the presentation of a report, by the EU's special advisor on international accounting standards, on the EU's contribution to work in the field (15614/13).

It held an exchange of views, focusing on three issues raised in the report:

• the process followed in adopting international financial reporting standards (IFRS) in the EU;
• governance issues related to the European financial reporting advisory group (EFRAG) and the EU's accounting regulatory committee;
• funding issues.

The Council asked the Commission to look into these issues further and to report back at one of its forthcoming meetings.

Speaking at the ECOFIN Council on 15 November, Commissioner Barnier said: European legislation must be quickly adapted to international standards in order to provide a sound basis against which the new international standards can be assessed.

The Maystadt report is part of a global reflection on accounting standards, also taking into account international developments in this field and the evaluation of the Regulation on the application of IFRS. I attach particular importance to the speedy implementation of the recommendations of Maystadt so that our companies and the users  of their financial services are guaranteed the best international accounting standards as soon as possible.

Full Council results

Barnier speech (French)

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