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IAS Regulation


The objective of the International Accounting Standards (IAS) Regulation is the harmonisation of the financial information presented by issuers of securities in the European Union (EU). This is in order to ensure a high degree of transparency and comparability of financial statements and thus an efficient functioning of the European capital market and of the internal market.

Following their endorsement in the EU, issuers of EU listed companies on regulated markets should mandatorily make use of International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) for their consolidated accounts.

ESMA actively contributes to the endorsement process of the new IFRS and/or their amendments in the EU by participating as an official observer in the Accounting Regulatory Committee (ARC), in the European Financial Reporting Advisory Group (EFRAG) and its working groups. ESMA also actively contributes to the policy initiatives related to the further development of corporate reporting and evaluation of the existing legislative framework (such as Evaluation of the IAS Regulation or Corporate Reporting Fitness Check).

Under Commission Regulation (EC) No 1569/2007, ESMA prepares reports on the level of convergence of third country Accounting Standards towards IFRS as well as the quality of application and enforcement of financial reporting. This is so that the EC can provide a report to the European Council and the European Parliament on the conditions under which the GAAP of a third country can be considered equivalent to IFRS.

Comments Letters on proposed standards

ESMA contributes to the standard-setting process by submitting comment letters to the IASB and European Financial Reporting Advisory Group (EFRAG) covering all IASB major Exposure Drafts open for comments and conveying the views of European enforcers on proposed new standards and interpretations. ESMA also provides comment letters on EFRAG Draft Endorsement Advice. 

In its work, ESMA particularly focuses on improving the usefulness and transparency of the decisions regarding financial information and the enforceability of IFRS, by contributing to the due process of the IASB.

Submission of accounting issues to the IFRS IC

ESMA regularly contributes to the accounting standard-setting process by submitting to the IFRS Interpretations Committee (IFRS IC) issues where diversity in practice was identified, requesting additional guidance where a lack of clarity in IFRS might contribute to their divergent application.