Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 258/2014 establishing a Union Programme to support specific activities in the field of financial reporting and auditing for the period of 2014-20

The single internal market is one of the European Union's greatest achievements. Integration and a perfectly functioning internal market are indispensable in making the Europe 2020 strategy successful; put the EU economy on a sustainable growth path in order to overcome the financial and sovereign debt crisis that unfolded since 2008.

As capital markets are global, harmonisation of financial reporting and audit rules at global level is essential for the smooth functioning of the capital markets and also the realisation of an integrated market for financial services in the EU. Instead of introducing its own set of financial reporting standards, the EU decided in 2002 with the adoption of Regulation 1606/2002 on the application of international accounting standards (IAS Regulation) to implement internationally agreed accounting standards, the so-called International Financial Reporting Standards (IFRS) developed by the International Accounting Standards Board (IASB).

With more and more countries moving towards and adopting IFRS, the EU has to speak with one voice. The European Financial Reporting Advisory Group (EFRAG), the European Commission's technical adviser in accounting matters has gradually taken up the role of providing upstream, technical and credible input to the IASB standard setting process. Both the international standard setter and the organisation representing Europe's interests need to be independent, possess the sufficient capacity and expertise to produce quality standards and input to those standards, and have sound financial basis in order to be able to carry out their public interest mission on a long-term basis.

To these ends, in 2009 the European Parliament and the Council established a Community Programme to support specific activities in the field of financial services, financial reporting and auditing. This programme was extended with the Regulation (EU) No 258/2014 of the European Parliament and the Council of 3 April 2014 ("Financing Regulation"). The beneficiaries of the extended programme are the IFRS Foundation, EFRAG and the Public Interest Oversight Board (PIOB).

The Financing Regulation prolonged the financing of the IFRS Foundation and PIOB for the period 2014-2020. In view of the uncertainties related to a major governance reform the organisation was undergoing in 2014, the co-legislators decided to limit its financing period until the end of 2016 and called on the Commission to submit a legislative proposal, if appropriate, to continue financing of EFRAG after 31 December 2016. In the meantime, the governance reform of EFRAG was successfully implemented on 31 October 2014. Consequently, the purpose of this regulation is to extend the Union co-financing of EFRAG for the period 2017-2020 under the Union programme established by the Financing Regulation.

• Primary Source

EUR-Lex: COM(2016)202: Follow the progress of this proposal through the decision-making procedure http://eur-lex.europa.eu/legal-content/EN/HIS/?uri=COM:2016:202:FIN

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