European Financial Reporting Advisory Group

EFRAG Facts

EFRAG – European Financial Reporting Advisory Group - was set up in 2001 to assist the European Commission in the endorsement of International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB) by providing advice on the technical quality of IFRS. EFRAG is a private sector body set up by the European organisations prominent in European capital markets, known collectively as the ‘Member Organisations’.

In the IAS Regulation (N° 1606/2002) that requires all European listed companies to apply IFRS from 2005 in their consolidated financial statements, there is reference to the European Commission seeking advice from a technical committee prior to endorsing standards. EFRAG fulfils the role of that technical committee. In addition to obtaining advice from EFRAG, the European Commission seeks advice from Member states through the Accounting Regulatory Committee (ARC), wherein EFRAG participates as an official observer.

In March 2006, EFRAG's role was formalised in a Working Arrangement with the European Commission, which states that 'EFRAG will provide advice to the Commission on all issues relating to the application of IFRS in the EU.'

EFRAG is funded by the Member body organisations which pay subscriptions on a half-yearly basis and by voluntary contributions. In addition, EFRAG receives since 2010 financial support from the European Union - DG Internal Market and Services. The contents of this website are the sole responsibility of EFRAG and can under no circumstances be regarded as reflecting the views of the European Union.

The work of EFRAG is overseen by a Supervisory Board drawn from the Member body organisations of EFRAG and chaired by Pedro Solbes Mira. The European Commission is an observer at the Supervisory Board Meetings.

EFRAG operates through a Technical Expert Group (EFRAG TEG), which makes its decisions independently of the EFRAG Supervisory Board and all other interests. The 12 voting members of EFRAG TEG were selected from throughout Europe and come from a variety of backgrounds. The chairmen of the French, German, Italian and UK Standard Setters are non-voting members of EFRAG TEG. Representatives of the European Commission and ESMA attend EFRAG TEG meetings as observers.

The Chair of EFRAG TEG - Françoise Flores – is full-time, and the other voting members devote 30 to 50% of their time to EFRAG. All the members of EFRAG TEG, except for EFRAG's full-time Chairman, as well as the working groups, provide their time without charge to EFRAG.

EFRAG TEG has set up Working Groups and Advisory Panels to provide it with technical advice on a number of specialist areas: click here to see the list of EFRAG's Working Groups and Advisory Panels.

EFRAG is staffed by a Secretariat which prepares papers and provides technical support to the EFRAG TEG members.

EFRAG’s role is both proactive and reactive. In particular it:

• provides advice to the European Commission on the endorsement of new or amended IFRSs and IFRS interpretations;

• comments on proposed IFRSs and IFRS interpretations, IASB discussion papers and other consultative documents;

• attends various IASB Working Group meetings as observers;

• maintains regular contacts with the IASB through meetings with its chairman. IASB Board members and senior staff participate in each EFRAG TEG meeting;

• works closely with European National Standard Setters (NSS) on various activities designed to encourage debate in Europe on accounting matters, in order to develop European views on issues of importance and enhance the quality of Europe's input to the IASB (see also section on Proactive Activities);

• meets quarterly with the European National Standard Setters (NSS) to exchange views;

• meets quarterly with European User representatives in the EFRAG User Panel;

• participates in the World Standard Setters meetings (organised by the IASB);

• participates in the meetings of the former IASB liaison standard setters where technical issues of a proactive nature are discussed.

In addition, EFRAG has recently been invited by the IASB to provide input to the IASB/FASB convergence work.

EFRAG has been granted observer status in the IASB working groups on:

• Financial Instruments
• Insurance Accounting
• Performance Reporting
• SME Accounting
• Leasing
• Employee Benefits Working Group

EFRAG maintains contacts with the European Commission directly, as well as indirectly, through Commission representatives participating as observers in all EFRAG TEG meetings and working groups and by holding regular meetings.

The members of EFRAG TEG are appointed by the EFRAG Supervisory Board, with the assistance of a Nominating Committee, following an open call for candidates. The EFRAG Supervisory Board looks primarily to the qualifications of the EFRAG TEG candidates in terms of knowledge and experience and endeavours to ensure a broad geographical balance, together with experience from preparers, the accounting profession, users and academics.

In the same way, members of working groups are appointed following a call for candidates published on our website with the aim of ensuring an appropriate professional and geographical balance.

Transparency and due process

Transparency and due process characterise the work of EFRAG. EFRAG has established and open and transparent due process, which allows and encourages European constituents to provide input for the consideration of EFRAG.

The EFRAG Technical Expert Group, the EFRAG Supervisory Board and the EFRAG Planning and Resource Committee, operate similarly.

The transparency and independence of EFRAG is mainly achieved by:

holding all discussions in public meetings, publishing meeting agendas and summaries on the EFRAG website;
publishing EFRAG preliminary positions, with an open call for comments, regardless of whether these relate to due process documents issued by the IFRS Foundation, the IASB or the draft endorsement advice to support the European endorsement process;
publishing all comment letters received and of EFRAG's final positions, including presentation of the basis for the EFRAG Technical Expert Group's conclusions for the endorsement advice and reasoned positions for comments to the IASB;
issuing a public consultation on the EFRAG proactive agenda;
issuing an invitation for comments on all discussion papers published as part of EFRAG's proactive work.

EFRAG maintains contact with the European Commission directly and also through the Commission's role as an observer at all EFRAG meetings. EFRAG is an official observer at the Accounting Regulatory Committee (ARC) and EFRAG is invited to attend some parts of the Standards Advice Review Group (SARG) meetings.

Proactive Activities

In 2005, EFRAG reached an understanding with the European national standard setters that EFRAG and the national standard setters should work more closely together to improve the input from Europe to the global standard-setting process. It was also agreed to pool resources on the proactive work in order to stimulate, carry out and manage proactive development activities designed to encourage the debate in Europe on accounting matters and designed to enhance the quality of the proactive input to the IASB.

The Proactive Activities (Proactive) are coordinated by the EFRAG Planning & Resource Committee.

An overview of the Proactive Advisory Panels can be found here .

Building strong influence beyond the borders of Europe

EFRAG enjoys a constructive relationship with the IASB in many ways: EFRAG welcomes IASB members and staff as observers to the EFRAG Technical Expert Group’s meetings; EFRAG’s staff cooperates with the IASB’s staff on a frequent basis; EFRAG and the IASB hold regular joint public meetings; and EFRAG and IASB Chairs meet privately on a regular basis.

EFRAG is a member of the Global Group of National Standard Setters and tends to develop bilateral relationships with regional or national groups interested and involved in IFRS development.