Question

Please describe the process of endorsement within the EU as far as the adoption of the IFRS and subsequent modifications are concerned.

Answer 1

Solution

IFRS Adoption for the use in the (EU) European Union

As per the requirement of EU Accounting Regime requires the IFRS is adopted in the European Union. The following are the process of endorsement as described by the European Commission.

1. The standard is issued by IASB (the International Accounting Standards Board).
2. The European Financial Reporting Advisory Group (EFRAG) consults with the interest groups.
3. EFRAG studies about the potential economic effects in EU due to implementation of new standard and confirms its advice to the Commission on whether the new standard meets the condition of endorsement.
4. Once the advise is received from EFRAG, the Commission prepares a draft endorsement Regulation and sends the draft for the opinion of Accounting Regulatory Committee (ARC). The opinion is finalized based on the majority of votes of ARC favoring the draft endorsement Regulation.
5. ARC votes on the proposal sent by the Commission as per the requirement of Article 6 of IAS regulation. Based on the favorable majority votes, the draft regulation is sent to Council of European Union and European Parliament for their opinion on the endorsement of the standard.
6. The Council of European Union and European Parliament has three months time to accept or oppose the adoption of the draft Regulation forwarded by the Commission with the consent of ARC.
7. On the event of receiving favorable opinion from the Council of European Union and European Parliament (or) on the event that the three months time period has elapsed and there was no opposition from the Council of European Union and European Parliament, the Commission adopts the draft Regulation.
8. Once the standard is adopted, it is published in the Official Journal and implemented on the date decided by the Commission at the time of preparing the draft Regulation.