The 'Bundesverband deutscher Banken' (Association
of German Banks), representing more than 200 private commercial banks
in Germany, has contributed to the discussion around IFRSs in Europe and
voiced strong support for existing structures and processes.
Without being a direct response to the European Commission's questionnaire
seeking respondents' views on the impact of International Financial
Reporting Standards (IFRS) in the European Union, the timing and content
of a booklet The future of IFRSs in Europe published today
shows that not all European voices criticise and question the
application of full and unaltered IFRSs in Europe.The booklet claims that the debate on appropriate accounting reveals fears and worries that prove to be unwarranted on closer scrutiny. It therefore provides a detailed overview of how an IFRS is developed and becomes applicable law in Europe. The booklet concedes that the process for developing IFRSs is "unlike the conventional legislative process we are familiar with in Europe", but it also notes that the IASB's standard-setting process has been continuously improved over the past ten years to strengthen transparency and participation and the setting-up of a Monitoring Board in 2009 has established a direct link to the major regulators around the world.
Therefore, the German private banks view recent international developments (first in the US, where the FASB turned away from some convergence projects, and now in Europe, where politicians call for more of a European influence and maybe a European version of IFRSs) critical:
We take a critical view of these developments. So
that it can continue to perform its job as an independent global
standard-setter, the IASB should not be allowed to become a plaything of
diverging national interests. Purely national interests inevitably have
to take a back seat in efforts to develop an internationally accepted
financial reporting convention. The IASB’s work as a standard-setter
should therefore be kept largely free of political influence in the
future as well. This is the only way to ensure high-quality standards
and uphold the IASB's good reputation in the long term.
The banks also believe that any tinkering with the European endorsement process would be harmful:
Any European go-it-alone approach must be avoided,
however. The non-recognition of individual IFRSs in Europe (carve-out)
or the establishment of European accounting rules would be at odds with
the target of uniform international accounting standards. The
comparability of financial information would be impaired; the result
would be a competitive handicap for internationally operating companies
based in Europe.
In the press release accompanying the publication of the booklet, the
German banks even express the hope that the endorsement process of IFRS 9 Financial Instruments, which is currently postponed in the EU, would be taken up soon and concluded speedily.The booklet also states that a strict and efficient enforcement is needed to reap the benefits of using interntational standards. However, similar to the points made above, the banks maintain that European Securities and Markets Authority (ESMA) must avoid interfering with international processes:
We support ESMA's activities as long as there is a
strict separation between standard-setting and enforcement. On the other
hand, setting actual accounting and valuation rules is not ESMA's job
in our view, but should be left to the IASB and the IFRS Interpretations
Committee.