<ul><li>REPARIS Workshop </li></ul><ul><li>Vienna </li></ul><ul><li>15 March 2006 </li></ul><ul><li>Enforcement of IFRS in...
FEE <ul><li>44 Member Bodies of professional accountants </li></ul><ul><ul><li>From 32 countries </li></ul></ul><ul><ul><l...
Background <ul><li>October 1999 FEE Discussion Paper on a Financial  Reporting Strategy within Europe </li></ul><ul><li>Ma...
Background <ul><li>October 2002 CESR - Proposed SOP – Principles of  Enforcement of Accounting Standards in  Europe </li><...
Background <ul><li>November 2003 FEE Discussion Paper European  Enforcement  Coordination -  Coordination at European Leve...
Background <ul><li>February 2004 Call of CESR on accountancy profession in  relation to 2003 year-end audit </li></ul><ul>...
Background <ul><li>December 2005 FEE Communication to Member  Bodies: Reference to the Financial  Reporting Framework in t...
What was the picture back in 2001? <ul><li>2001 FEE Study Enforcement Mechanisms in Europe </li></ul><ul><li>Oversight sys...
Framework for High Quality Financial Reporting <ul><li>Proper financial accounting standards </li></ul><ul><li>Preparation...
Framework for High Quality Financial Reporting  <ul><li>Effective enforcement bodies </li></ul><ul><li>Stock Exchanges wit...
FEE Discussion Paper European Enforcement Coordination 2003: Views on interpretation and implementation <ul><li>Avoid maki...
Consistency <ul><li>“…  consistent application does not mean identical application; it means acceptable by reference to th...
Consistency <ul><li>Consistent Application of IFRS: critical importance </li></ul><ul><li>Effective implementation of IFRS...
Consistency <ul><li>Consistent Application of IFRS – An Auditor´s Challenge </li></ul><ul><li>First year of implementation...
Consistency <ul><li>Consistent Application of IFRS </li></ul><ul><li>Essential to recognise that IFRS principle-based stan...
Consistency <ul><li>Consistent Application of IFRS </li></ul><ul><li>Each of the parties involved in the financial reporti...
Initiatives by the Accountancy Profession <ul><li>July 2005 EFRAG Supervisory Board “Discussion Paper on Achieving Consist...
Initiatives by the Accountancy Profession <ul><li>FEE Position Paper </li></ul><ul><li>Financial Reporting: Convergence, E...
Some good news… <ul><li>FEE has always supported global, principle-based standards </li></ul><ul><li>IFRS is a major step ...
<ul><li>REPARIS Workshop </li></ul><ul><li>Vienna </li></ul><ul><li>15 March 2006 </li></ul><ul><li>Enforcement of IFRS in...
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  1. 1. <ul><li>REPARIS Workshop </li></ul><ul><li>Vienna </li></ul><ul><li>15 March 2006 </li></ul><ul><li>Enforcement of IFRS in listed companies: The Implications for the Accountancy Profession </li></ul><ul><li>Erich Kandler </li></ul><ul><li>Chairman FEE Company Law and Corporate Governance Working Party </li></ul><ul><li>Member of FEE Financial Reporting Policy Group </li></ul>
  2. 2. FEE <ul><li>44 Member Bodies of professional accountants </li></ul><ul><ul><li>From 32 countries </li></ul></ul><ul><ul><li>With over 500.000 members </li></ul></ul><ul><li>Website: www.fee.be </li></ul>
  3. 3. Background <ul><li>October 1999 FEE Discussion Paper on a Financial Reporting Strategy within Europe </li></ul><ul><li>May 2001 FEE Study – Enforcement Mechanisms in Europe </li></ul><ul><li>April 2002 FEE Discussion Paper on Enforcement of IFRS in Europe </li></ul><ul><li>June 2002 IAS Regulation – Central role of the Commission, CESR and Member States </li></ul>
  4. 4. Background <ul><li>October 2002 CESR - Proposed SOP – Principles of Enforcement of Accounting Standards in Europe </li></ul><ul><li>March 2003 CESR Standard n° 1: Enforcement of Standards on Financial Information in Europe </li></ul><ul><li>7 October 2003 Draft Standard n° 2: Coordination of Enforcement Activities </li></ul><ul><li>10 October 2003 FEE Round Table on Enforcement </li></ul>
  5. 5. Background <ul><li>November 2003 FEE Discussion Paper European Enforcement Coordination - Coordination at European Level of National Enforcement Mechanisms and how an interpretation mechanism should work post 2005 </li></ul><ul><li>December 2003 CESR Recommendation of Additional Guidance Regarding the Transition to IFRS </li></ul>
  6. 6. Background <ul><li>February 2004 Call of CESR on accountancy profession in relation to 2003 year-end audit </li></ul><ul><li>22 April 2004 Standard No. 2: Coordination of Enforcement Activities </li></ul><ul><li>28 October 2004 CESR Paper: The Role of CESR at “Level 3” under the Lamfalussy Process </li></ul>
  7. 7. Background <ul><li>December 2005 FEE Communication to Member Bodies: Reference to the Financial Reporting Framework in the EU in Accounting Policies and in the Audit Report and Applicability of Endorsed IFRS </li></ul><ul><li>(after FEE Discussion Paper and Analysis of Responses earlier in 2005) </li></ul><ul><li>January 2006 CESR Public Statement on clear and transparent disclosure when making use of any options </li></ul>
  8. 8. What was the picture back in 2001? <ul><li>2001 FEE Study Enforcement Mechanisms in Europe </li></ul><ul><li>Oversight systems differ widely: </li></ul><ul><ul><ul><li>Stock exchange </li></ul></ul></ul><ul><ul><ul><li>Regulator </li></ul></ul></ul><ul><ul><ul><li>Governmental department </li></ul></ul></ul><ul><ul><ul><li>Review Panel </li></ul></ul></ul><ul><li>Most countries: </li></ul><ul><ul><ul><li>No enforcement of financial statements </li></ul></ul></ul><ul><li>Not much review of substance or systematic review </li></ul><ul><li>Foreign listings: usually relied on enforcements body in the home country </li></ul>
  9. 9. Framework for High Quality Financial Reporting <ul><li>Proper financial accounting standards </li></ul><ul><li>Preparation by an effective and well resourced internal company accounting function </li></ul><ul><li>Internal audit and informed review by directors, Audit Committees or Supervisory Boards </li></ul><ul><li>Proper approval procedures of financial information by the body responsible within the company </li></ul><ul><li>External audit and external review subject to appropriate quality assurance systems </li></ul>
  10. 10. Framework for High Quality Financial Reporting <ul><li>Effective enforcement bodies </li></ul><ul><li>Stock Exchanges with supportive listing agreements </li></ul><ul><li>Sponsors, advisers and investment bankers committed to high quality financial reporting </li></ul><ul><li>Investors, analysts, rating agencies and the financial press: clear ethical obligations to raise issues of dubious financial reporting </li></ul><ul><li>Auditors that can cope with the challenge to enforce principles </li></ul>
  11. 11. FEE Discussion Paper European Enforcement Coordination 2003: Views on interpretation and implementation <ul><li>Avoid making separate European rules </li></ul><ul><li>Enforcing existing standards </li></ul><ul><li>Consultation arrangements with IASB, IFRIC, EFRAG, SEC and other enforcement bodies </li></ul><ul><li>Enforcement bodies should not reduce existing flexibility contained in IFRS </li></ul><ul><li>No court interpretations of accounting standards </li></ul><ul><li>Clear distinction between enforcement and standard setting </li></ul>
  12. 12. Consistency <ul><li>“… consistent application does not mean identical application; it means acceptable by reference to the standards…” </li></ul><ul><li>FEE Position Paper </li></ul>
  13. 13. Consistency <ul><li>Consistent Application of IFRS: critical importance </li></ul><ul><li>Effective implementation of IFRS in practice: SEC condition for elimination of reconciliation requirement </li></ul><ul><ul><li>EC/SEC Roadmap – confirmation February 2006 </li></ul></ul><ul><ul><li>Second half 2006 SEC staff analysis financial statements foreign issuers </li></ul></ul>
  14. 14. Consistency <ul><li>Consistent Application of IFRS – An Auditor´s Challenge </li></ul><ul><li>First year of implementation of IFRS in real life </li></ul><ul><li>Little industry peer comparison is available </li></ul><ul><li>but </li></ul><ul><li>Capital markets will get better information than they did in the past </li></ul><ul><li>More comparability </li></ul><ul><li>It must be expected that it will take some time to achieve and demonstrate success in consistent application (and audits) </li></ul>
  15. 15. Consistency <ul><li>Consistent Application of IFRS </li></ul><ul><li>Essential to recognise that IFRS principle-based standards should respect reasonable judgments by both preparers and auditors – not necessarily identical decisions </li></ul><ul><li>Co-ordination within EU and beyond essential among market participants and regulators especially </li></ul><ul><li>IFRIC’s role as the only authoritative interpreter of IFRS </li></ul>
  16. 16. Consistency <ul><li>Consistent Application of IFRS </li></ul><ul><li>Each of the parties involved in the financial reporting chain has to fulfil its role in achieving consistent application of IFRS </li></ul><ul><li>The accountancy profession is ready to assume its fair share by </li></ul><ul><ul><li>Ensuring high quality audits through training and </li></ul></ul><ul><ul><li>Maintaining independence in fact and appearance as well as </li></ul></ul><ul><ul><li>Raising awareness at the board level </li></ul></ul>
  17. 17. Initiatives by the Accountancy Profession <ul><li>July 2005 EFRAG Supervisory Board “Discussion Paper on Achieving Consistent Application of IFRS in the EU” </li></ul><ul><li>September 2005 EFRAG Advisory Forum </li></ul><ul><li>EC Informal Roundtable </li></ul>
  18. 18. Initiatives by the Accountancy Profession <ul><li>FEE Position Paper </li></ul><ul><li>Financial Reporting: Convergence, Equivalence and Mutual Recognition </li></ul><ul><li>March 2006 </li></ul><ul><li>FEE Seminar 1 December 2005 “IFRS Convergence and Consistency ” </li></ul>
  19. 19. Some good news… <ul><li>FEE has always supported global, principle-based standards </li></ul><ul><li>IFRS is a major step forward </li></ul><ul><li>Capital markets will get better information than they did in the past </li></ul>
  20. 20. <ul><li>REPARIS Workshop </li></ul><ul><li>Vienna </li></ul><ul><li>15 March 2006 </li></ul><ul><li>Enforcement of IFRS in listed companies: The Implications for the Accountancy Profession </li></ul><ul><li>Erich Kandler </li></ul><ul><li>Chairman FEE Company Law and Corporate Governance Working Party </li></ul><ul><li>Member of FEE Financial Reporting Policy Group </li></ul>

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