Europe’s IFRS implementation working, says report

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BRUSSELS – The Committee of European Securities Regulators (CESR), through its operational committee (CESR-Fin), has published a report looking into enforcement of International Financial Reporting Standards (IFRS) across the EU.

The report reviews the enforcement activities of CESR members and their regulators on IFRS standards in consolidated accounts of issuers trading within the EU since December 31, 2005.

CESR reports a laudable level of compliance overall, despite many EU members not having completed necessary implementation of enforcement mechanisms in the period covered by the review. The report is only a snapshot in an evolutionary process, within which trends are still developing.

Twenty out of 27 EU member states had introduced an enforcement mechanism by 2006 to comply with CESR’s enforcement standards, with 11 fully meeting the standards – constituting 60% of all issuers trading within Europe. Nine others had reached an almost complete level of compliance.

CESR praises the hard work involved in compliance, and EU enforcers have also admitted the strain of implementing IFRS in the consolidated accounts of over 7,000 EU issuers without market disruption. Supervisors also believe IFRS implementation has improved the quality of financial reporting, due to increased issuer transparency and comparability. It favours additional disclosure and a reduction in the number of available accounting options to facilitate future compliance.

The report is also an update of continuing co-operation in information exchange between CESR and the US Securities and Exchange Commission, looking towards wider international co-operation.