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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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slide2

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?

slide3

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

slide5

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
slide13

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
slide20

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?
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