A new report from the European Parliament (EP) has called for more transparency and greater geographic representation within the International Accounting Standards Board (IASB). The report outlined European concerns about the governance of the IASB and the International Accounting Standards Committee Foundation (IASC) trustees. It was adopted by Members of the European Parliament after a vote on the proposals.
The EP welcomed recent efforts by the IASB to address governance, including proposals to set up a monitoring body for the trustees and to change the geographical composition and size of the IASB.
However, the report argued more needs to be done, including a debate on integrating the IASB into a system of international governance with the International Monetary Fund, Organisation for Economic Co-operation and Development and the World Bank.
The report said that since the EU is the largest jurisdiction to adopt IFRS, there should be more European representatives in the standard-setting body and that all trustees of the IASB should come from nations that have either signed up to the IFRS or intend to do so.
The EP wants a prior assessment of the impact and merits of changes for European companies and users of financial statements before convergence with third-country standards, such as US GAAP, takes place.
It also wants an independent oversight body to monitor the IASC and IASB, which would consist of market participants, deliver an annual report and be responsible for appointing trustees in a transparent manner.
In terms of IASB funding, the EP said all the user groups should be adequately involved, there should be no conflict of interest between financiers and users and access to the standards should be made universal.
The report also criticised the controversial draft IFRS for SMEs, claiming it was far too complicated and that the EC should arrange a proper consultation procedure for an EU accounting framework for SMEs.