EFRAG – European Financial Reporting Advisory Group - was established in 2001 with the encouragement of the European Commission to provide input into the development of IFRS issued by the IASB and to provide the European Commission with technical expertise and advice on accounting matters.
EFRAG is a private sector body established by European organisations that play a prominent role in Europe’s capital markets, known collectively as “EFRAG Member Organisations”. EFRAG’s role as technical advisor to the European Commission is formalised in a Working Arrangement which states that “EFRAG will provide advice to the European Commission on all issues relating to the application of IFRS in the EU. In close consultation with the European Commission, EFRAG will participate in the early phases of debate on all issues related to the standard setting process”. EFRAG’s activities are hence aimed at ensuring that European views on the development of financial reporting are properly and clearly articulated in the international standard-setting process.
Influencing the international debate on accounting matters from a European perspective is EFRAG’s primary objective. The main role of EFRAG is to provide input into the development of IFRS issued by the IASB in such a way that the resulting standards and interpretations are good for Europe and therefore are capable of being endorsed for use in Europe. EFRAG is doing so through both its participation in the IASB’s consultation process and its proactive work. EFRAG also provides the EC with technical expertise and advice on the technical quality of IFRS that the European Commission decides to consider for endorsement. The Accounting Regulatory Committee (ARC) consisting of Member States representatives provides the European Commission with political guidance and approval, whether the proposed standards or interpretations are conducive to the European public good. EFRAG is an official observer on ARC
The private sector funding of EFRAG is provided by its Member Organisation and National Funding Mechanisms (national systems that collect contributions to fund EFRAG). 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 , with Hans van Damme as acting Chairman. The European Commission and ESMA are observing EFRAG 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 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.
The EFRAG Planning and Resource Committee sets the agenda for the proactive work resulting in the issuance of discussion papers and other outputs. The technical content of the discussion papers is the joint responsibility of EFRAG Technical Expert Group and the National Standard Setters that are partners in the specific project. The EFRAG Planning and Resource Committee provides guidance on the allocation of available resources to proactive projects and monitors the progress of the work concerned. The objective of the proactive work is to involve European stakeholders at an early stage in defining improvements to financial reporting so as to influence the IASB.
The EFRAG Planning and Resource Committee consists of four members of the EFRAG Supervisory Board, the Chairs of four National Standard Setters from France, Germany, Italy and the UK and the EFRAG Chairman plus the European Commission and the other National Standard Setters as observers.
An overview of the Proactive Advisory Panels can be found here .
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 are 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 on EFRAG draft positions and 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;
publishing feedback statements on the main projects
issuing a regular public consultation on the EFRAG proactive agenda;
issuing an invitation for comments on all discussion papers published as part of EFRAG's proactive work.
organising outreach events, field-testing and special surveys to assess the effects of proposed standards in partnership with the European National Standard Setters, and in cooperation with the IASB during EFRAG's due process period, followed by the publication of feedback statements.
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). Together with the European Commisison, EFRAG organises European Brussels-based outreach events in the form of public hearings.
Public accountability is ensured on the one hand by EFRAG’s governance arrangements and on the other by EFRAG’s due process. It is of crucial importance to the success and credibility of EFRAG. EFRAG is accountable to the public at large and the European institutions through its open and transparent due process; including public consultation on its publications; transparency of EFRAG’s work; public meetings of the EFRAG Technical Expert Group, EFRAG Supervisory Board and the EFRAG Planning and Resource Committee and open nomination processes. EFRAG publishes every year an extensive Annual Review discussing its activities and presenting financials of the past year. The funding by the European Commission brings enhanced scrutiny of EFRAG’s activities and expenses, including the publication of audited annual accounts and detailed activity reports to the European Commission.
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 staff cooperates with the IASB staff on a frequent basis; the IASB participates in outreach events and field-testing organised by EFRAG in partnership with European National Standard Setters; and EFRAG and IASB Chairs meet privately on a regular basis.
EFRAG is a member of the European delegation to the IASB Accounting Standards Advisory Forum (ASAF), a member of the International Forum of Accounting Standard Setters (IFASS) and has bilateral relationships with regional or national groups interested and involved in IFRS development. EFRAG also participates in the World Standard Setters meeting. EFRAG is a member of the IFRS Advisory Council.