The adoption of IFRS has contributed to improving the quality of financial reporting in Europe in the past decade, however improvements in effects analysis and education are required, said European Financial Reporting Advisory Group (EFRAG) chairman Françoise Flores in a speech at an event held by ACCA earlier in the month.
As the use of IFRS across the EU moves to its second decade further improvements are needed, said Flores, especially in the area of effect analysis and field test, to ensure that potential new requirements can be implemented in practice at a reasonable cost and provide the intended outcome on a consistent basis.
"EFRAG has paved the way in the past three years and has established strong cooperation with National Standard Setters in the organisation of field tests. Going forward, we wish to integrate our efforts into those of the IASB [International Accounting Standards Board], in a process that is open and transparent," she said.
Secondly, Flores believes there needs to be more effort in education.
"IFRS rely on the assumption that users are reasonably knowledgeable; education should help in ensuring the appropriate level of knowledge. Issuers need to be supported as well, as the implementation of principle-based standards require skills which were less in demand before IFRS were adopted or even before the latest more principle-based standards were issued," she said.
"The IFRS Foundation is allocating resources to education efforts. We collectively have to ensure that these efforts reach their targets, are made more visible and intervene more timely."
As the European Commission undertakes the review of IFRS after 11 years since its adoption, Flores says this is a healthy process, "and I trust that the conclusions will be for the better and will capitalise on the existing strengths that the European Commission and EFRAG have built so far for Europe".
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