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08 Aug 2016

International Financial Securities Regulatory Commission Regulation on the application of International Financial Reporting Standards

The objective of adopting International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) is to standardise companies’ financial reporting so that:

 

- financial statements are more transparent and comparable;

- the EU capital market and the single market can operate efficiently.

 

To achieve this objective, Regulation (EC) No 1606/2002 was adopted (the “IAS Regulation” or Regulation on the application of International Financial Reporting Standards). The scope of the IAS Regulation is as follows:

 

- Basic rule – IFRS shall be applied to the consolidated financial statements of EU companies whose securities are traded on a regulated EU market.

- Discretionary application – EU countries can opt to extend the use of IFRS to annual financial statements and non-listed companies as well.

 

A dedicated endorsement process was established together with new consultative and advisory organisations (ARC and EFRAG).

 

IFRSs are adopted by the EU in the form of regulations, which are published in the Official Journal of the European Union. Regulations are directly applicable in all Member States.

 

The International Financial Securities Regulatory Commission was established to promote investor confidence in the securities and capital markets by providing more structure and government oversight.



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