The position paper ‘Towards a global, investor focused standard setter for corporate
non-financial reporting’ that Eumedion published today, calls on the IFRS
Foundation (‘Foundation’) to expand its mission. The Foundation should
establish a separate standard setting board for non-financial reporting, next
to the existing International Accounting Standards Board for financial
reporting. The Position Paper concludes an extensive consultation following the
publication of Eumedion’s Green Paper ‘Towards a global standard setter for non-financial reporting’
published on 30 October 2019 (‘Green Paper’).
The Green Paper provided a sound starting
point for a broad discussion with stakeholders. Nine respondents provided us with written feedback. The subsequent evaluation of all the input received, also provided a firm basis for the other stances
in the position paper. Most notably that investors struggle to assess how a
company creates long-term value and how a company lives up to the valid needs
of society where non-financial performance matters; that enforceable and consistent international standards are needed to ensure that non-financial reporting
is faithfully represented; and that the auditor should provide more assurance
on the management report: reasonable assurance on certain non-financial key performance indicators, and limited assurance on
the entire management report. Eumedion publised a feedback statement on 24 July.
The position paper further acknowledges the
EU’s strong commitment to a sustainable future. Eumedion would welcome a
leadership role of the EU that clearly recognises the global nature of the
challenges faced; the need for, ultimately, global reporting standards; and the
necessity of a governance structure of the standard setter that fosters
international buy-in from jurisdictions whose commitment to a sustainable
future is similar to the EU’s.
In the above light, Eumedion is pleased
that the EC Commissioner Mr. Dombrovskis recently reiterated his stance that ‘…
non-financial reporting standards would be open, transparent and inclusive, as
we want to avoid fragmentation of global capital markets’. Eumedion remains
confident that the IFRS Foundation involvement herein will remain part of the
discussion on how to realise this vision.
We are also pleased to learn from the minutes of the IFRS Foundation Trustees & Due Process Oversight
Committee as published last Friday, that the Trustees decided, as part of a
strategic review, that a consultation paper will be published following ‘the
increasing demand for global standards that provide comparable, decision-useful
and auditable information to investors and other interested stakeholders’.