INTERNATIONAL ACCOUNTING STANDARDS : EUROPEAN SUPERVISORS CONCERNED OVER MAYSTADT'S REPORT.

The three European financial supervisors have expressed their concerns over elements of a report by Philippe Maystadt on how the EU's influence on the development of international fiancial reporting standards (IFRS) can be increased. In a letter sent to the European Commission on 20 January (1), the European Securities and Markets Authority (ESMA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Banking Authority (EBA) said they want to play a greater role than the private sector in the adoption of these IFRS at European level.

Last November, Maystadt, who is special advisor to Internal Market Commissioner Michel Barnier on this subject, published his report to help the Commission in its assessment of the regulation on the application of IFRS at European level, planned for the end of 2014 (Regulation 1606/2002, amended in 2008). This matter will be contentious.

IFRS are set by the International Accounting Standards Board (IASB) - which is based in London - and have been applied since 2005 to listed companies for their consolidated accounts. The aim is to harmonise accounting practices at international level.

"The three ESAs strongly believe that the responsibility for giving endorsement advice to the Commission, which ultimately decides on the adoption of accounting standards within EU legislation, can only be entrusted to a public body that has the duty to protect the public interest," say the three supervisors. Roughly translated, this means that the private sector should not have the last word on these opinions.

Specifically, the three bodies criticise Maystadt's proposal to reorganise the European Financial Reporting Advisory Group (EFRAG), a group of experts who lend their expertise to the evaluation of these standards. This reorganisation would include the transformation of its supervisory board into a high-level group, whose task would be to approve the opinions on the IFRS that EFRAG provides to the Commission. This board would be composed of members of the three European supervisors, the European Central Bank (ECB) and the private sector (such as banks and insurance companies). However, the problem for the three authorities is that decisions of the board would be taken by consensus, with the possibility for individual members to abstain.

"Only the public authorities represented in the proposed board should decide on the final endorsement advice to the European Commission, taking into...