Stig Enevoldsen has been the face of financial reporting
in Europe for the past six years. With his term as chair of the
European Financial Reporting Advisory Group recently completed, he
speaks with Carolyn Canham about the triumphs, challenges and what
it is like to leave the group behind.

Stig Enevoldsen

As chair of the European Financial
Reporting Advisory Group (EFRAG), Stig Enevoldsen spent six years
travelling the length and breadth of Europe, speaking at events,
gathering opinions and seeking a united European view to present to
the likes of the European Commission and the International
Accounting Standards Board (IASB).

He has dealt with the long hours and budget
travel requirements of working for a low-resource organisation,
faced unreasonable criticism and attacks, and navigated the
politics of 27 countries. But most of all, Enevoldsen has enjoyed
the ride.

Looking back, Enevoldsen sees two major
achievements from his time as chair – growing EFRAG into a
high-quality, technical organisation and implementing the proactive
programme.

“When I took over as chair, EFRAG was two
people and a secretary, it was very, very tiny,” Enevoldsen
explains.

“One major achievement was we grew EFRAG into a
technically high-quality organisation, our comment letters to the
IASB were at a very high level.

“We built it up to be well known as a spokes
group for Europe on accounting issues and respected not only in
Europe but around the world. This was mainly due to the skills and
hard work of Paul Ebling, the technical director whom I got hold of
shortly after taking office.”

One notable indicator of the quality of EFRAG’s
technical work was the recent admission by IASB member Jim
Leisenring that EFRAG’s comment letters were “thoughtful”.
Enevoldsen says that meeting Leisenring’s notoriously high
standards is better than being honoured by the Queen of
England.

 

Being proactive

It was Enevoldsen’s idea to introduce
EFRAG’s proactive work in 2005. The Proactive Accounting Activities
in Europe programme has dual objectives.

“It has the objective to influence the IASB,
but it also has the objective of creating debates in Europe. There
was previously not a lot of debate on the continent, but I think
our papers helped get those debates going and getting a better
understanding of the issues before the IASB invited comments on the
same subjects. It enhanced Europe’s and EFRAG’s standing around the
world as well.”

Enevoldsen says particularly successful
projects include a revenue recognition paper, a pensions paper, a
performance reporting paper and an equity/liability paper – all
prepared in partnership with the UK and German standard
setters.

Co-operation with the national standard setters
has been vital for EFRAG, as it has always been a struggle to find
enough resources to achieve the work on its agenda.

“We were always under staffed and under funded
in relation to the ambitions we had and the expectation people
had,” Enevoldsen explains.

“We created some expectations and others
created expectations for us so it was quite difficult to manage. We
had a very good staff, everyone worked extremely hard and we
succeeded.”

During the past couple of years, EFRAG received
significantly increased funding and from this year the EC will fund
50% of its expenses. Enevoldsen says this is satisfying recognition
of the group’s work over the years.

 

The hardest task

Enevoldsen says the difficulties associated
with working for an under-resourced organisation, such as working
long hours and budget travel throughout Europe did not bother him
at all. The one thing he did find hard was dealing with
unreasonable and hidden opposition.

“The more influence we got and the more
important we became, the more opposition we were exposed to,” he
explains. “Sometimes we had to react to completely unreasonable
criticism and attacks from envious people who thought we achieved
too much and therefore they went for us. That was
disappointing.

“To me what was important was improving
accounting in Europe and I wanted co-operation of the European
players to archive that. I also accepted we needed give up certain
ground in order to co-operate. I thought it was nonsense when
people didn’t want to co-operate because EFRAG was too powerful,
because to improve accounting in Europe, you need to get the best
possible input to the IASB.

“I didn’t want to fight with other Europeans, I
wanted to co-operate and work together.

“I couldn’t care less about having to work 10
hours extra or travelling monkey class, but things like that, that
really was hard for me. That could irritate my weekends.”

But for every unreasonable opponent, there were
many more valuable supporters.

“Göran Tidström, the chairman of EFRAG’s
supervisory board, was my biggest supporter,” Enevoldsen says. “He
was fantastic to work with, gave me freedom to improve things and
we shared the vision for EFRAG and that was fantastic.”

Françoise Flores, who was Enevoldsen’s deputy
chair and has now succeeded him, was another great support, as was
Ebling. The Federation of European Accountants (Fédération des
Experts Comptables Européens – FEE) has also been a vital
contributor to EFRAG’s work.

“FEE has always been an important pillar among
our members,” Enevoldsen says. “They were a major basis for us
achieving what we have achieved.”

Enevoldsen says what he enjoyed most about
chairing EFRAG were the technical debates, meeting interesting
people when travelling Europe and giving presentations.

He also enjoyed working towards a united
European view.

“It was fascinating trying to get the various
views in Europe to meet and try to find a common view going
forward,” he explains.

“We have come from a background of Europeans
from different countries all thinking ‘what I do is right’ but by
working together we have actually achieved adoption of IFRS. We
disagree on certain points, but we are much closer than we were
five years ago.”

Enevoldsen has also enjoyed witnessing an
“enormous improvement” to European accounting. The introduction of
IFRS in Europe was one obvious milestone.

“IFRS has meant comparability and transparency
for accounting in Europe,” he explains. Before, you had 27
different accounting languages that were not at all similar and not
very transparent. Suddenly you have got the same type of accounting
for listed companies, it is very transparent.

 

Good relations

EFRAG has a good relationship with the IASB and
Enevoldsen says he also has a positive personal relationship with
David Tweedie.

“EFRAG sees itself as a supporter of the IASB.
We are friends who come up with positive, constructive input to the
debate.

“David has been very supportive of EFRAG and I
appreciate that and I appreciate the good co-operation we have had
in those 10 years. David is probably the best chairman the world
could have for the IASB. He has done a magnificent job.”

In recent years the IASB has begun working more
closely with the US Financial Accounting Standards Board (FASB).
Enevoldsen believes this means the rest of the world, including
Europe and Japan, will have to work together to ensure the IASB
comes to conclusions that are satisfactory on the technical level
to the entire world.

“EFRAG may have to influence the FASB more
because they now work so closely with the IASB,” he explains. “That
will be a different challenge and more demanding because of the
different accounting literature. When we respond to the IASB, we
know the entire set of rules. So therefore it is a bigger challenge
to be involved with the FASB because you don’t necessarily know the
background and all the details of the US standards.”

 

Time to go

Enevoldsen completed his term as EFRAG
chair at the end of March. He will remain involved with some of
EFRAG’s proactive projects, including chairing a new disclosure
framework working group and acting as vice chair of a working group
on SME accounting in Europe.

Enevoldsen says it is impossible to say at this
stage what direction SME accounting in Europe will take.

“It is extremely political, very difficult to
predict. But my personal view is the internal market in Europe
deserves improvement in accounting either through the accounting
directives or the use of IFRS for SMEs because there is so much
trade between countries, we cannot just have national GAAPs
anymore, we must have something we use in Europe, or at least what
we use must be improved and more converged.”

Despite retaining some connections to EFRAG,
Enevoldsen says it feels strange that for the most part he is
leaving the group behind.

“In some respects it is like when your grown-up
child moves away. I spent 130% of my time there and suddenly I am
completely out and there is nothing I can do about it.

“I am happy to leave a strong EFRAG, but of
course I miss it because it was something I enjoyed very much. I am
also lucky to have a good successor. Françoise Flores is very
committed and will be a very good chairman so in that respect I am
happy.”

While Enevoldsen plans to continue supporting
EFRAG in any way he can, he also has another interesting and
ambitious new project.

“I would like to modernise accounting,” he
explains.

“Accounting has improved in the way we have
refined the line items in the financial statements, but they are
all still on paper. The modern world is not on paper so that is
what I would like to work on.”

He explains it is about ensuring that
accounting is keeping up with the times.

“We must ensure we are not reporting as we did
100 years ago and only refining measurement and recognition,”
Enevoldsen explains. “We must ensure accounting is seen as a modern
thing, which was part of my philosophy at EFRAG. I wanted to have a
modern organisation, expressed by having a young, dynamic
organisation with colourful offices. When you see photos in the
annual review, people always smile because we like what we do, it
is fun, accounting is fun”.

Enevoldsen recently turned 60 and he says the
modernisation project will be his last challenge.

“I have always done a lot of things people
didn’t believe possible. I was part of starting accounting
standards in Denmark, I was part of the IASC, I was the last full
term chairman before it became the new IASB and we achieved
something important  – not me per se, but the group.

“And then EFRAG was built up and everybody was
saying that was impossible.

“It is the same with this next challenge,
people say ‘you are an idiot, it is impossible’, but I don’t think
it is.”