The ASB works closely with EFRAG, which provides:
- endorsement advice and effects studies to the European Commission in line with the requirements of EU Regulation 1606/2002 (known as the IAS, International Accounting Standards, Regulation). EFRAG provides the Commission with opinions on whether an accounting standard issued by the International Accounting Standards Board (IASB) or an interpretation issued by the International Financial Reporting Interpretations Committee (IFRIC) to be endorsed complies with EU law;
- accounting advice to the Commission on EU Accounting legislation;
- pro-active input to the IASB and IFRIC on all their consultation documents; and
- pro-active thinking on accounting issues as part of the Pro-active Accounting Activities in Europe (PAAinE) initiative.
EFRAG was founded in 2001 by European organisations representing issuers, investors and the accountancy profession. EFRAG’s role was formalised in a Working Arrangement concluded with the European Commission Services in 2006. EFRAG has subsequently instituted a number of governance reforms, which became effective in the early part of 2009, in order to increase its accountability, ensure greater transparency and introduce public oversight over the organisation.
EFRAG operates through a Technical Experts Group (TEG), which makes its decisions independently of all other interests. The 11 voting members of TEG are selected from throughout Europe and come from a variety of backgrounds. The ASB chairman and the chairs of the French and German standard-setters are non-voting members of TEG. In addition, representatives of the European Commission and the Committee of European Securities Regulators (CESR) attend TEG meetings as observers.
On pro-active activities, EFRAG and the European National Standard Setters (NSS) have agreed to pool some of their resources and work together more closely so that Europe as a whole can participate more effectively in the global accounting debate. It was agreed that this initiative should in the beginning concentrate on long-term pro-active activities. The objective of the initiative is to stimulate debate on important items on the IASB agenda at an early stage in the standard-setting process before the IASB formally issues its proposals. The initiative has the joint ambitions of representing a European point of view and exercising greater influence on the standard-setting process.
Pro-active projects are discussed and agreed by the Planning & Resources Committee (PRC). The PRC is chaired by a member of the Supervisory Board member, and other members include the EFRAG TEG Chairman and the ASB Chairman, plus the Chairs of NSS from Italy, France, and Germany.
EFRAG’s due process is an important part of its work to engage European constituents. In responding to documents issued by the IASB and developing pro-active work, EFRAG issues on its website draft documents to constituents to understand the issues that may flow from adoption of accounting proposals. Comments received form a crucial part of TEG’s considerations. Similarly, endorsement advice and effect studies are also issued in draft form providing constituents the opportunity to comment on the conclusions reached and are an integral part of finalising advice to the European Commission. The ASB’s policy is to respond to all EFRAG consultations.
Further details can be found on the EFRAG website at www.efrag.org.
