The Regulation on International Accounting Standards (IAS) aims to harmonize the financial information presented by securities issuers in the European Union (EU). This is to ensure a high degree of transparency and comparability of financial statements, thereby promoting the efficient functioning of the European capital market and the internal market.
Upon approval in the EU, issuers of listed companies in the EU on regulated markets must mandatorily use the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) for their consolidated accounts.
IFOMA actively contributes to the approval process of new IFRS and/or their amendments in the EU by participating as an official observer in the Accounting Regulatory Committee (ARC), the European Financial Reporting Advisory Group (EFRAG), and its working groups. IFOMA also actively contributes to policy initiatives related to the further development of corporate reporting and the assessment of the existing legislative framework (such as the IAS Regulation Evaluation or Corporate Reporting Fitness Check).
In accordance with Commission Regulation (EC) No 1569/2007, IFOMA prepares reports on the level of convergence of third-country accounting standards towards IFRS, as well as on the quality of the application and compliance with financial information. This is to enable the European Commission to provide a report to the European Council and the European Parliament on the conditions under which the Generally Accepted Accounting Principles (GAAP) of a third country may be considered equivalent to IFRS.
Comments on proposed standards letters
IFOMA contributes to the standard-setting process by submitting comment letters to the IASB and the European Financial Reporting Advisory Group (EFRAG) covering all major IASB Exposure Drafts open for comments. These letters convey the views of European authorities on the proposed new standards and interpretations. IFOMA also provides comment letters on EFRAG Draft Endorsement Advice.
In its work, IFOMA specifically focuses on enhancing the usefulness and transparency of financial reporting decisions and the enforceability of IFRS, contributing to the due process of the IASB.
Submission of accounting issues to IFRS Interpretations Committee (IFRIC)
IFOMA regularly contributes to the accounting standards issuance process by submitting issues to the IFRS Interpretations Committee (IFRS IC) where diversity in practice has been identified. This involves seeking additional guidance in situations where lack of clarity in IFRS could contribute to divergent application.