Room for interpretation in ifrs the kiss of death or road to success for ifrs
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Prof. Dr. S. J. Maijoor (AFM). Room for interpretation in IFRS: The Kiss of Death or Road to Success for IFRS?. Room for Interpretation in IFRS; CESR’s Response & Role in the New Accounting Era. Two main topics: CESR Co-ordination mechanism

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Room for interpretation in IFRS: The Kiss of Death or Road to Success for IFRS?

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Room for interpretation in ifrs the kiss of death or road to success for ifrs

Prof. Dr. S. J. Maijoor (AFM)

Room for interpretation in IFRS: The Kiss of Death or Road to Success for IFRS?


Room for interpretation in ifrs the kiss of death or road to success for ifrs

Room for Interpretation in IFRS;

CESR’s Response & Role in the New Accounting Era.

Two main topics:

CESR Co-ordination mechanism

Is there a need for a European IFRS interpretation mechanism?


Room for interpretation in ifrs the kiss of death or road to success for ifrs

Room for Interpretation in IFRS;

CESR’s Response & Role in the New Accounting Era.

1.CESR Co-ordination mechanism


1 cesr co ordination system

1. CESR Co-ordination system

A. Key actors in the process of getting and applying IFRS in the EU

B. Some specific elements of the IFRS framework

C.The description of the CESR co-ordination mechanism


Room for interpretation in ifrs the kiss of death or road to success for ifrs

Standard application process

CESR-EECS

-Enforcement

decisions

-Database

-Co-operation

with SEC

-Endorsement

National courts

-Case

settlement

Competent

authorities

-National ex-post

enforcement

-National ex-ante

enforcement

Market

participants

-Users of inform.

-Market discipline

Auditors

-Audit opinion

Issuers

-Preparation of

Fin. statements

A.Key actors in the process of setting and applying IFRS in the EU:

EU Court of

Justice

-Interpretation

Of EU Law

Standard setting process

EU Commission

And Parliament

-Endorsement

decision

-Publication in OJ

ARC

-Endorsement

opinion

EFRAG

-Endorsement

advise

IASB - IFRIC

-Standards and

Interpretations

-Technical

corrections

National Standard

Setters

-Local

interpretations

Academics, Audit

Firms (tech.dep.)

-Accounting

doctrine


1 cesr co ordination system1

1. CESR Co-ordination system

  • The European financial reporting framework and the role of some specific elements of the IFRS framework

  • Formal IASB Standards and IFRIC Interpretations


1 cesr co ordination system2

1. CESR Co-ordination system

  • The European financial reporting framework and the role of some specific elements of the IFRS framework

  • Formal IASB Standards and IFRIC Interpretations

  • Technical corrections


1 cesr co ordination system3

1. CESR Co-ordination system

  • The European financial reporting framework and the role of some specific elements of the IFRS framework

  • Formal IASB Standards and IFRIC Interpretations

  • Technical corrections

  • Local (national) interpretations


1 cesr co ordination system4

1. CESR Co-ordination system

  • The European financial reporting framework and the role of some specific elements of the IFRS framework

  • Formal IASB Standards and IFRIC Interpretations

  • Technical corrections

  • Local (national) interpretations

  • Clarifications of standards-interpretations


1 cesr co ordination system5

1. CESR Co-ordination system

  • The European financial reporting framework and the role of some specific elements of the IFRS framework

  • Formal IASB Standards and IFRIC Interpretations

  • Technical corrections

  • Local (national) interpretations

  • Clarifications of standards-interpretations

  • Auditors' opinions


1 cesr co ordination system6

1. CESR Co-ordination system

  • The European financial reporting framework and the role of some specific elements of the IFRS framework

  • Formal IASB Standards and IFRIC Interpretations

  • Technical corrections

  • Local (national) interpretations

  • Clarifications of standards-interpretations

  • Auditors' opinions

  • Enforcement decisions


1 cesr co ordination system7

1. CESR Co-ordination system

  • The European financial reporting framework and the role of some specific elements of the IFRS framework

  • Formal IASB Standards and IFRIC Interpretations

  • Technical corrections

  • Local (national) interpretations

  • Clarifications of standards-interpretations

  • Auditors' opinions

  • Enforcement decisions

  • Market discipline


Room for interpretation in ifrs the kiss of death or road to success for ifrs

Standard setting (endorsement)

EU-

Parliament

Endorsed

Standards

And

Interpre-

tations

(EU Law)

IASB

IFRIC

EFRAG

(advise to EC)

EU-

Comm.

ARC

Standards application

IFRIC

interpre-

tations

EU

National

enforcers

CESR-

EECS

IFRIC

Issuers

IFRIC

clarifi-

cations

Auditor


1 cesr co ordination system8

Issuers

Auditors

EU National enforcers

CESR - EECS

IFRIC

IFRIC Clarifications

IFRIC

interpre-

tations

1. CESR Co-ordination system


1 cesr co ordination system9

1. CESR Co-ordination system

C. The description of the CESR co-ordination mechanism

  • Key principles of the mechanism:

    • Discussion of enforcement decisions and experiences within a formal structure

    • All supervisory bodies take into account the existing decisions taken by EU National Enforcers

    • Development of a database as practical reference tool (not a book of rules!)


1 cesr co ordination system10

1. CESR Co-ordination system

C. The description of the CESR co-ordination mechanism

  • Current thoughts on enhancement of the co-ordination process:

    • Particular issues caused by the transition to IFRS

    • Interactions with other EU stakeholders

    • Operational co-operation with third countries securities regulators


1 cesr co ordination system11

1. CESR Co-ordination system

C. The description of the CESR co-ordination mechanism

  • EECS: The European Enforcers' Coordination Sessions:

    • Include all enforcers on financial information in EU (also non-CESR members)

    • Bimonthly meetings with persons representing 27 countries

    • Discussing the decisions taken or to be taken by local enforcers

    • Agenda committee EECS

    • EECS Database


1 cesr co ordination system12

1. CESR Co-ordination system

C. The description of the CESR co-ordination mechanism

  • EECS Database: Database of enforcement decisions.

    • Collection of all relevant European enforcement decisions

    • Both action and non-action decisions of enforcement

    • Both ex-ante and ex-post decisions included

    • Not a rule book of interpretations!!


1 cesr co ordination system13

1. CESR Co-ordination system

C. The description of the CESR co-ordination mechanism

  • EECS Database, member obligations

    • Timely input of new decisions

    • Consultation of database on taking a decision

    • Take into account existing decisions

    • Consult peers in cases of apparently contradicting decisions


Room for interpretation in ifrs the kiss of death or road to success for ifrs

Room for Interpretation in IFRS;

CESR’s Response & Role in the New Accounting Era.

2.Is there a need for a European IFRS interpretation mechanism?


2 is there a need for a european ifrs interpretation mechanism

2. Is there a need for a European IFRS interpretation mechanism?

  • Some of CESR initial views:

  • Reaching appropriate level of consistency is of high importance

  • Already existing complex landscape in EU

  • Gaining experience with new reporting environment in due time

  • No need for additional institute in absence of convincing needs

  • Balancing of the cost and benefits of a new mechanism


2 is there a need for a european ifrs interpretation mechanism1

2. Is there a need for a European IFRS interpretation mechanism?

  • Important elements to keep in mind:

  • The importance of preserving fundamental characteristics of IFRS- international- principle based

  • Desire to provide EU players with more guidance for application- what is the level of consistency required?

  • What is the role of third country issuers going to be on enforcement and interpretations of IFRS?


Room for interpretation in ifrs

Room for interpretation in IFRS:

The Kiss of Death?


Room for interpretation in ifrs1

Room for interpretation in IFRS

Or: Road to Success?


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