Local view for "http://purl.org/linkedpolitics/eu/plenary/2007-11-12-Speech-1-223"
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"en.20071112.23.1-223"2
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"Mr President, I would like to warmly thank the Committee on Economic and Monetary Affairs for the excellent work they have carried out regarding the adoption of International Financial Reporting Standard (IFRS) 8 – Operating Segments, the new standard on segment information.
After the International Accounting Standards Board (IASB) issued the standard in November 2006, a debate ensued concerning the suitability of IFRS in the European context. This debate was useful. We had to make sure that the European Union would not adopt a new accounting standard just for the sake of convergence with the equivalent US standard, but mainly because it improves the quality of financial information and is conducive to the European public good.
Before reaching a final decision, the Commission and Parliament agreed in May 2007 that the Commission’s services would carry out an analysis of the potential consequences of adopting IFRS 8. They ran a public consultation during July and August and gathered the views of stakeholders on the cost/benefit implications and the overall impact of adopting IFRS 8. On the basis of almost 200 contributions, my services have prepared a report which was provided to Parliament on 10 September 2007. The report’s main conclusion is that the benefits of adoption of IFRS 8 would outweigh its costs. Further, many constituents stressed that a swift endorsement of IFRS 8 would remove uncertainty about the treatment of financial statements for the period ending in December 2007.
Let me stress that we did not ignore the concerns that had been raised regarding the introduction of the so-called ‘management approach’, which gives management more leeway compared with the existing standard on segment reporting. Some constituents were concerned that IFRS 8 lacks strict requirements on detailed geographical information because it allegedly does not require sufficient detail on a country-by-country basis. Discussions with constituents revealed, however, that IFRS 8 is rather expected to improve this kind of disclosure. Further, it seems that particular concerns in this area, in our view – and in the view of the majority of respondents to our consultation – cannot be resolved through a financial reporting standard on segment information. This could be better done through a further development of a framework regarding corporate social responsibility aspects.
We agreed that IFRS 8 should not be adopted solely for the sake of convergence, yet we believe that it is crucial to see the issue also in the broader context of the European Union adopting a set of standards which are truly global. A couple of years ago we all agreed that Europe should not opt for its own set of standards but rather support and promote the development of a high quality and global set of standards like IFRS.
We are working on improving the governance of the IASB. On 7 November the European Commission, the US Securities and Exchange Commission and the Japanese Financial Services Agency made a joint statement announcing their agreement to seek certain changes to strengthen the institutional framework of the International Accounting Standards Committee (IASC) Foundation. These changes are intended to strengthen the accountability of the Foundation’s trustees, in particular by replacing the current self-appointment process for the appointment of the trustees with a process in which public authorities are responsible for the final approval of trustees.
The joint statement also recognised the importance of further strengthening the IASB’s due process, including by carrying out impact assessments. This agreement provides a strong basis to address the concerns expressed by this Parliament. It also reflects the issues identified by the Commission’s two monitoring reports to ECOFIN concerning the IASB’s governance. We will work with the IASC Foundation and the international partners to develop more detailed proposals in the coming months. We will, of course, maintain a close dialogue with the European Parliament throughout this process. I am confident that the outcome of this process will ensure that standards respond to European needs and are easily acceptable and applicable by all stakeholders in the EU and also globally.
Let me conclude. The swift adoption of IFRS 8 is important for two reasons. It improves the quality of financial information and it provides certainty to all market participants. The discussions of the last months have demonstrated that a stronger involvement of the European Parliament in the endorsement process is necessary. The Commission will also continue to work with the IASB and the IASC Foundation and with our international partners to ensure that the process of developing international accounting standards is fully accountable, transparent and meets the needs of European stakeholders."@en1
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