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November 26, 2009

EFRAG chair urges calm over IFRS 9 stalemate

The chairman of the European Financial Reporting Advisory Group (EFRAG) has said it is important to understand IFRS 9 has not been declined by Europe and urged calm from stakeholders who have warned of negative repercussions from postponed EC endorsement.

EFRAG published draft endorsement advice on IFRS 9 Financial Instruments on 2 November, which supported endorsement. This was based on a near final draft of the standard. It noted at the time that the positive advice could change if the draft standard changed or following feedback from stakeholders.

However, on 12 November, the day that IFRS 9 was released, EFRAG said endorsement advice had been postponed.

The advisory group can only issue endorsement advice to the European Commission when it is requested.

EFRAG chairman Stig Enevoldsen conceded that the EC Economic and Financial Affairs Council asked for the new standards to be issued quickly but added that if those asking for a new standard were not fully happy with it, they had the right to evaluate it carefully.

“I can understand if the International Accounting Standards Board is irritated but I can also understand if other people need to have more time to evaluate the outcome and see what the implications are for the future,” Enevoldsen said.

Some organisations have said the postponed endorsement from the EC could place some companies at a competitive disadvantage and exerts undue political or commercial influence on the standard setting process.

Enevoldsen said these statements are as political as any others and also premature.

“The more people talk about uncertainty, the more uncertainty they create,” he said. “I would advise to just be calm and relaxed and then move forward. Usually we have found solutions, so let us work on this.”

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