President. − The next item is the report by Alexander Radwan, on behalf of the Committee on Economic and Monetary Affairs, on International Financial Reporting Standards (IFRS) and the Governance of the International Accounting Standards Board (IASB) (2006/2248(INI)) (A6-0032/2008).

  Alexander Radwan, rapporteur. − (DE) Madam President, the subject matter of the report before us would seem, at first glance, to be highly technical. It concerns so-called accounting standards in the European Union and worldwide, particularly for small and medium-sized companies. It may very well be the type of subject that is discussed now in the European Parliament and then takes several years to begin to affect the economy and ordinary people. At that stage the cry will go up that nobody knows where these standards come from or who is responsible for them. Nor will anyone know why they have to be applied.

The objective is to achieve a single set of global accounting standards, particularly for public limited companies. We support that objective. The argument we hear advanced for it is that we need ‘high quality standards’, and this House considers itself the only forum empowered to set those high quality standards. However, in these times of turbulence on the financial markets, it is astonishing to hear the same people who previously argued for the principle of ‘fair value’ now questioning that principle and asking, too, whether a ‘market to market’ approach still makes sense if we no longer have a market. The very people who let the genie out of the bottle are the ones now asking whether we are on the right track.

The only people responsible for these standards are the people sitting in the offices of this private organisation in London, who are undoubtedly influenced in making their standards by the desire to keep themselves in a job. My report, on which we are to vote today, therefore concerns not just the impact on small and medium-sized companies, but also the fundamental question of who makes rules for whom, and who supervises the application of the rules.

The first issue to address is that of governance: how transparent is this organisation? In other words, how transparent is its funding? There are certainly hidden interests here. The members of this committee, who are demanding transparency and always try to portray the market as transparent, should make at least a modicum of effort to comply themselves with the transparency requirements they lay down for the market! My impression so far is that this organisation fights with every means at its disposal to avoid transparency in any form.

Who takes the decisions about financing and the choice of personnel for specific posts? Why are individuals appointed? Is it about regional balance? Is it about inter-sector balance? The current project concerns IFRS for small and medium-sized companies, so it is fair to ask who represents small and medium-sized companies. Who knows about small and medium-sized companies? And another thing: why are IFRS for small and medium-sized companies actually on the agenda right now? Who sets the agenda?

Commissioner McCreevy and Sir David Tweedie have also been asked many times, over a number of years, why we are actually doing this. Several years down the line we now know why we are discussing IFRS for small and medium-sized companies in Europe: it is because of requests from South Africa and Brazil. What a marvellous answer! We know quite well that the focus of all this is not South Africa or Brazil, but rather the European market, where there will be a lot of money to be made if SMEs are required to introduce something like this. So these are the issues at stake in the matter of governance – and some initial, positive steps have been taken.

But all the bodies that are to be set up in the future will be assessed according to whether the people who belong to this supervisory organisation and have to answer questions about it at political level – and they could include a Member of the Commission – will also have the power to shape new developments. It is not enough for them simply to be notified of proposals.

One of our aims is convergence. We must take care, however, that the interpretation of convergence does not slip from Europe’s grasp, to be replaced by the SEC’s interpretation. In Europe today we are sufficiently familiar with the way the US stock exchange is supervised. We should not be so naïve as to leave the business of supervision to the Americans. What we want is therefore what we have already called for: IFRS as Europe understands them and not as this board dictates.

Small and medium-sized companies are the ones affected here, and I have to say, without mincing my words, that the ideas on the table today are too complicated and too difficult. I would also warn against taking the voluntary approach. I am wearing my Bavarian national costume today and a good old Bavarian term comes to mind here: it is ‘hinterfotzig’ and it means something like ‘through the back door’. We know very well – despite all the denials and the acquiescence – that IFRS for small and medium-sized companies will be introduced to the European market through the back door, via a small number of Member States. We will then hear the same voices calling for a single set of standards, and they will proceed to foist their standards on the market – standards which are too complex, which nobody understands and nobody wants – purely because there is a market opportunity. What we have here is a case of a minority trying to impose its will on a majority at global level, and it is unacceptable!

  Charlie McCreevy, Member of the Commission. − Madam President, I would like to thank the Committee on Economic and Monetary Affairs and in particular the rapporteur, Mr Radwan, for the considerable work that has gone into this comprehensive report.

It raises important issues for the future development of European and indeed global capital markets. In this brief intervention I cannot address all the issues raised in the report. Let me therefore focus on three points. One, governance issues; secondly the EU’s input to the International Accounting Standards Board, the IASB; and thirdly the project to develop an accounting standard for small and medium-sized enterprises.

On IASB governance, your report rightly highlights the fact that our shared objective is to develop high-quality global accounting standards. The EU’s decision to require listed companies to use international accounting standards was a bold and visionary step towards this objective. A single set of globally accepted accounting standards would provide significant benefits for our companies, our capital markets and our economy.

We must continuously strive to ensure that international accounting standards remain relevant in the face of changing economic circumstances and that they represent the interests of all stakeholders in a balanced manner. To ensure that these conditions can continue to be met, progress should be made as a matter of priority in three areas.

Firstly, the accountability of the International Accounting Standards Committee Foundation (IASCF), needs to be enhanced, in particular towards public authorities. The latter should play an active role in the selection and appointment of trustees. In this respect, the proposal that I, together with my counterparts in the US SEC, the Japanese FSA and the International Organisation of Securities Commissions, made last November goes in the direction advocated by your report.

Secondly, we need to look at how the IASB’s agenda-setting process can be improved. In particular, the process through which priorities are set needs to be made more open and more transparent.

Thirdly, the IASB’s due process should be enhanced, mainly by ensuring that standards are subject to a full impact assessment before they are adopted.

Your report makes constructive suggestions about these and related points. The forthcoming review of the IASCF’s constitution provides the opportunity to implement the necessary reforms. The committee will pursue them in consultation with this House, the Member States and our international partners.

Now, turning to the EU’s input to the IASB. Your report argues that the EU needs to strengthen its capacity to make its views on accounting matters heard at the international level. I agree. In particular we should seek means to ensure that the views of European stakeholders, especially proactive input to the IASB’s agenda-setting process, can be put to the IASB in a more timely and coherent manner.

I see this as an evolutionary rather than a revolutionary process. We should build on the European Financial Reporting Advisory Group and I am ready to pursue this as a matter of urgency, including the possibility of using funding from the Community budget to support such a structure.

I must, however, sound a clear and unambiguous warning. This structure will in no circumstances become an embryonic European standard-setter, nor can there be any question of developing European interpretations of international accounting standards. Europe must and will remain part of the movement towards a single set of globally accepted accounting standards. Anything else would damage the international competitiveness of our companies and our capital market.

Turning now to the IASB’s project to develop an accounting standard for SMEs, let me begin by stating that the Commission currently has no legal basis to endorse this standard. Moreover, we have never made any commitment to take over whatever standard the IASB produces. We would only do so if we were genuinely convinced that the IASB produces a standard that meets the interests of European users.

The IASB has not yet finalised its project. However, at this stage the Commission’s views are clear. The current exposure draft published by the IASB remains too complex to provide a satisfactory accounting framework for European SMEs, especially for smaller companies. Our focus remains the simplification of the regulatory environment for SMEs, including in the accounting area.

  Klaus-Heiner Lehne, draftsman of the opinion of the Committee on Legal Affairs. − (DE) Madam President, ladies and gentlemen, the IAS system makes sense for big listed companies that operate worldwide. That is why, during Parliament’s last term, we decided, on the Legal Affairs Committee’s proposal, to adopt the IAS Regulation.

The ultimate aim – as Alexander Radwan has said – was indeed to achieve convergence, at least with the USA and if possible worldwide. The system makes no sense in the case of small and medium-sized companies because, as a rule, they have no need of international financial markets, no need of Wall Street and the rest. For that reason alone, the necessity of developing IFRS for small and medium-sized companies is highly questionable.

On top of that – and I think Commissioner McCreevy was entirely right here – the current proposal is for nothing more than a slimmed-down version of what are, by any measure, extremely complicated international standards, entirely unsuited to the structure of small and medium-sized companies in Europe. They are particularly ill-suited to family companies, which have been run by their owners for several generations; which have already written off property belonging to them; and in which the application of fair-value rules would simply encourage greed and, in the end, could very well jeopardise the companies’ chances of survival.

On the other hand, we must be realistic. Ultimately, the question of accounting standards for SMEs in Europe will not be exempt from some form of pressure for harmonisation. Our demand is for comparability, at least within the Single Market. So I think it is important that we should seriously consider how to develop European alternatives to the proposals from London, with the aim of achieving greater standardisation in this area too – but standardisation that is sensible and appropriate for SMEs and geared to the long term, rather than short-term valuation.

I have one further point to make about the IAS bodies. There is a real problem here, as Alexander Radwan has outlined. There may be a certain geographical balance but there is no balance in terms of economic weight. Europe is by far the largest bloc, the largest region in which the IAS rules apply. That is why we must have a commensurate say, and we simply cannot be compared with somewhere like Australia. Australia carries the same weight as a middle-sized EU country or, indeed, a big region like North Rhine-Westphalia. The balance needs to be improved in this respect.

  Cornelis Visser, on behalf of the PPE-DE Group. – (NL) Madam President, first of all my compliments to Mr Radwan on getting this thorough report completed. It was under discussion up to the very last minute. In its final form it is a report that is clear, but sometimes critical too. The rapporteur is convinced that the IASB's democratic accountability has to be improved and I am glad to see the IASB taking this criticism on board.

The Chairman of the Trustees, Mr Gerrit Zalm, indicated recently in the European Parliament that he was open to suggestions and ready to put forward proposals on adapting the structure. The IASB is working on IFRS standards for small and medium enterprises. I agree with the rapporteur that IFRS are too complex and too expensive for SMEs. I also believe that encouraging the voluntary use of IFRS by SMEs would carry the risk of them being introduced into Europe by the back door. In my view there has to be differentiation according to company size. It is a good thing to have big multinationals, banks and insurance companies which operate worldwide producing their annual accounts to a single standard. But small and medium-sized enterprises in Europe should have their own standard.

The IASB has achieved much in respect of internationally listed companies and accounting standards for them. If SMEs are now saying that cost and effort can be just as well managed using more than one standard, we cannot have a single standard being imposed from the top down. It is also very important that the interests of investors and of transparency should be considered too. Policy is there to facilitate, to ensure that there is sound, transparent and cost-effective information on business performance. I think the proven benefits of IFRS can also benefit European equity markets, certainly if the Americans exchange their US GAAP system for IFRS. Comparability here can be very beneficial to international investors and stakeholders. The idea behind IFRS thus deserves to be supported by the European Parliament.

  Pervenche Berès, on behalf of the PSE Group. – (FR) Thank you, Commissioner, for managing to come to Strasbourg. Thank you also to the rapporteur, in your Bavarian costume. I think we worked very well together, and the way in which it was possible for various people’s amendments to be incorporated in your report is proof of that.

First of all, I should like to make three points about accounting standards. It seems to me that, in terms of the governance and operation of the body responsible for setting these accounting standards, we are in an unusual situation. There are many forms of standardisation. Not all of them have such a strong impact on financial stability, or on the issues, in terms of power and governance, as accounting standards have. What is happening today is an important event, a passage to adulthood.

When these accounting standards were formulated, perhaps by auditors who worked amongst themselves, they basically prepared the ground very well. Nowadays these accounting standards are international. They are used and applied by everyone and so the question of governance is crucial.

How does the body responsible for setting these accounting standards fit in with international governance, in relation to democratic bodies, bodies that legitimately represent State power, and the European Union in particular?

The second point we need to look at in regard to governance is of course the balance between those bodies. What is the geographical balance, what is the balance in the representation not just of those who draw up the standards, but also of those who will have to use them?

The third point is financing. How are these bodies to be financed? Might the idea of a levy on businesses, which would be coordinated by regulatory bodies, be worthwhile? Could they be financed by government, by the European Community? We hope that the Commissioner will be making some strong proposals on that point.

The fourth question in regard to those bodies is the programme. Is it right for them to develop the concept of fair value when we know the effects that can have on financial stability? Is it right for this body to develop an SME programme that Europe does not need? Is it right that, on this issue of standards for SMEs – just because, as our rapporteur has said, South Africa or Australia might need them – the Commissioner did not make sure that Europe had a say in those bodies. It is absolutely essential, as a first step, that Europe should make sure it is there to represent the strength of all the Member States and the voice of Europeans, in the IASB, the IASCF and IFRIC. Commissioner, that is your responsibility. We are expecting strong proposals from you on that point.

  Sharon Bowles, on behalf of the ALDE Group. – Madam President, IFRSs are being adapted by more and more countries, so their value and importance is growing. This brings with it a need to strengthen accountability and transparency of the IASB, which may not have been so obvious at its inception. I welcome moves in that direction, but I regret that some parts of this report present criticism in a negative way, rather than acknowledging changes that are under way and pointing the way forward. So several of my amendments aim to be more forward-looking, highlighting the advantages and benefits, alongside the need for further adaptation, both to the standards themselves and the IASB that oversees them. However, unnecessary politicisation of technical issues must be avoided. IFRSs are an important tool for advancing comparability across borders and reducing burdensome requirements for companies reporting under different regimes, but it would be useful if presentation of financial statements lent itself more easily to other comparison purposes. However, it may well be the case that tools such as XBRL tagging can develop that. I have to thank Ms van den Burg for organising an interesting presentation on that subject last week.

The SME proposals cause concern in several quarters. To me they look more like a tool for medium entities, perhaps on their way to full public reporting, so they may merit their own separate consideration in that light or on a voluntary basis. But – as you have said, Commissioner – as yet they are far too complex for the majority of ordinary SMEs.

  Gay Mitchell (PPE-DE). - Madam President, I commend my colleague Mr Radwan for a very well written report. I hope the Bavarian national dress he is wearing here this morning is not indicative of a change in political direction.

The adoption of the IFRSs in January 2005 has brought great benefits to the European Union by making accountancy requirements simpler across borders and financial statements easier to compare across countries, competitors and industries, enhancing the work of regulatory oversight, banking and capital markets. International financial reporting standards are now being used or are being adopted in more than a hundred countries, including Australia, South Africa and others.

I support the calls for increased transparency, effectiveness and accountability over the IASB. The report points to the fact that 17 months had passed before the IASB appointed a new chairperson. This cannot be acceptable. The IASB is a private, self-regulatory body which has been given the role of rule-maker and it is only right that we demand increased accountability and oversight because of that. We should also be careful about calling for the establishment of extra EU structures to deal with the interpretation and application of IFRS standards. Why is it needed? What will it do?

On the subject of EU-US convergence, there has been great progress made in this area and in the EU-US accounting road map. Last year, the US President, the President-in-Office of the European Council and the President of the European Commission signed a joint EU-US statement which undertook to promote and to seek to ensure conditions for the US generally accepted accounting principles and the IFRSs to be recognised in both jurisdictions. This is very welcome.

With regard to the application of the IFRSs to SMEs, SMEs are small and smaller. I feel it might be better to make it optional so as to ensure flexibility, rather than prevent its application outright.

  Ieke van den Burg (PSE). - (NL) Madam President, I must echo the compliments paid to Mr Radwan, not least because his report has enabled us to have a very interesting debate on the conflicts between legislation and self-regulation, especially at world level.

I appreciate that our aspirations place us in a quandary. On the one hand we want these international standards, applicable worldwide, but on the other hand we insist on our authority as co-legislator to judge the substance of those standards and to discharge our duty as co-legislator responsibly. I think the European Parliament has shown latterly that it does that.

To my mind the key lies in timely consultation, in a balanced consideration of the interests of all stakeholders, including third-party interests of employees, local authorities, suppliers and so on (because adequate financial reporting benefits more than just money providers alone), and a sound assessment of the consequences. The Commission has a weighty responsibility here. And in the immediate future these things must be done on behalf of small and medium-sized enterprises. We can make this a really worthwhile project for the EU.

Lastly, I have two comments which are also relevant to another report which we shall be voting on in our next part-session, Mr Lehne's report on a simplified business environment for companies. Here too I have taken the line that rules are not just for companies, money providers and the accountants who earn their living from them, but also for employees and other groups. So we must not meddle with the quality of the rules. I have advocated that the rules should in any event be applied to delisted companies and off-balance activities. I hope you will agree that there is also work for the IASB to do in that area.

I will end by repeating my heartfelt endorsement of the XBRL standard. As you are aware, the US SEC is about to take a decision making this mandatory. I urge you to think about how Europe should respond to this, and encourage you to draw up a roadmap for Europe accordingly.

  John Purvis (PPE-DE). - Madam President, there are issues with the transparency and governance of the International Accounting Standards Board (IASB), but it has accepted this criticism and acknowledged the need to change. Steps have been taken and more are planned: publication of feedback statements, explaining the reasoning behind its decisions, pushing cost-benefit analyses and enlargement and more active involvement of the board of trustees. It bent over backwards to communicate with Parliament.

Mr Radwan’s report is much improved from earlier versions and I believe the positive amendments from the PPE-DE and ALDE Groups will further improve the text today.

I would like to thank the rapporteur because, although we have had our differences, he was willing to compromise in certain areas on this governance aspect. Unfortunately, I am unable to agree with him on the issue of International Financial Reporting Standards for SMEs. The IASB was asked to draw up a simplified version for SMEs. Mr Radwan’s report declines to acknowledge that this could also be useful in the European Union. In fact, with the proposal still only at the drafting stage, the report proclaims that it will definitely not benefit EU companies.

Yet we have been told repeatedly that it will be optional and is designed for those growing SMEs which aim to become public listed companies. Small enterprises with no aspirations beyond their local markets need not take it up. An opinion survey last September found that a clear majority of European SMEs, including German SMEs, considered the benefits outweighed any disadvantages and would improve financial reporting.

The efforts of the IASB to develop global accounting standards of a high quality are a major and welcome contribution to the European and world economies and, frankly, I think we should be applauding them.

  Antolín Sánchez Presedo (PSE). - (ES) Madam President, the requirement since 2005 for publicly traded companies to use the IFRS (International Financial Reporting Standards) for their consolidated financial statements has been a wide-ranging and hugely influential political initiative.

About 100 countries are using the standards and their globalisation has provided comparability and transparency, thereby increasing the confidence of operators, creating a more level playing field and strengthening market discipline.

The proposal contains two great challenges relating to governance. On the one hand, the private entity, which has been setting worldwide voluntary standards since 1973 on a corporate and professional basis, now finds itself in a position of huge responsibility entailing a change in its nature, procedures and composition in order that it can become a transparent, controllable institution, with a legitimacy reflecting its new role.

It is necessary to recognise and coordinate the activities of all the public and private interests concerned and at the same time to secure the organisation’s financing and independence in the setting of standards. Furthermore, the organisation must be integrated into international governance.

It is also necessary to strengthen European accounting governance by adopting a more proactive and integrated approach to the preparation, approval, implementation and assessment of standards. It is vital to improve the conceptual framework of standards, and to bear in mind that they are neither neutral nor academic and can produce both winners and losers. Likewise it is important to assess their effects and ensure their compatibility with European strategy, to learn from financial upheavals and to regulate the accounting standards of administrative concessions in a balanced way.

The financial accounting arrangements for SMEs will need to be simple and be linked to their exploitation of the internal and global market. These matters are covered by Mr Radwan’s report, which has achieved broad consensus and comes at a very opportune moment in terms of the upcoming review at the end of 2009, envisaging the creation of a supervisory body and altering the composition of the Standards Advisory Council before next year.

  Othmar Karas (PPE-DE) . – (DE) Madam President, Commissioner, Mr Radwan, ladies and gentlemen, I warmly welcome this report and this debate because I think we are probing some really sensitive issues, and we are doing so on a genuinely cross-party basis.

Several points emerge very clearly from what has been said. Firstly, we need a single set of standards for public limited companies, but we do not want to lump all companies together. Secondly, while we are not rejecting specific rules tailored to SMEs, the framework for those rules must be established by us, by the European Union. Thirdly, the measures currently proposed are too complex and too expensive, they are of no use to SMEs and for those reasons we must reject them. Fourthly, we are still awaiting satisfactory answers to the questions of who makes what rules for whom, and who supervises the process. There is no democratic legitimacy; there is no differentiation of approach; no account has been taken of the justifiable wishes of SMEs; and the system of democratic supervision is inadequate.

Fifthly, in taking a stance on this issue or trying to answer these questions, it is often forgotten that two-thirds of the workforce are employed in the private sector in family-owned companies, and the majority of those family-owned companies are SMEs that do not seek finance from the capital markets. This is a point we need to remember when we are confronted with proposals that would treat all companies alike.

Thank you for this worthwhile debate!

  Richard Howitt (PSE). - Madam President, paragraph 30 of our motion for a resolution points out that financial statements do not simply serve the needs of investors but also other stakeholders.

As we also draw attention to the need for EU law changes in paragraph 41, I rise to remind the Commissioner that this Parliament has voted that any changes to the fourth and seventh Company Law Directives should include a requirement for social and environmental reporting by companies.

I draw to his attention such requirements in South Africa, in France’s law on new economic regulations, as well as the recommendations of the Prince of Wales’s Accounting for Sustainability project from my own country, the UK.

In the mean time, and in addition, I would like to ask the Commissioner, following the 2001 Commission recommendation on environmental issues in our new accounts, whether the Commission could issue a similar recommendation on social issues in accounts. I would also like to ask the Commissioner to press the International Accounting Standards Board to include social and environmental aspects in its planned publication of a management commentary. The Commission may or may not want to call this corporate social responsibility, but perhaps today we can all agree to call it accounting for responsible companies.

  José Manuel García-Margallo y Marfil (PPE-DE). - (ES) Madam President, the recent financial crises have shown the importance of high-quality accounting standards for the proper functioning of the markets.

This being the case, it seems to me that another lesson of the crisis is that there is a certain asymmetry between the stated importance of accounting standards and the nature and operation of the private entities responsible for setting, producing and interpreting those standards.

Mr Radwan’s report is therefore correct to point out that the first matter to be dealt with is that of governance. In my view he has put forward intelligent and realistic proposals about the need for the institutions representing the Union to be more proactive in this process of setting standards which are to be incorporated into the Community legal order, also concerning the internal operating rules of those private entities. Greater transparency, safeguards to prevent conflicts of interest and broader geographical representation are some of the proposals which Mr Radwan has put forward.

The second aspect dealt with in the report is the matter of small and medium-sized undertakings. We have emphasised here in the House the need to reconcile two objectives: simplification and reduced cost of accounting procedures for SMEs and the provision of adequate information for market players.

The last point covered by Mr Radwan – and one with which I concur – is the need for global standards in a global environment. Therefore it is extremely important to reach agreements with the other major world financial markets, notably the United States.

This calls for greater dynamism and a more significant role for the European institutions, including this Parliament and all those listening today.

  Reinhard Rack (PPE-DE) . – (DE) Madam President, I can entirely endorse what our colleague has just said. The underlying premise here – and Mr Radwan pinpoints it in his report – is that an institution without a political mandate should nonetheless lay down a relatively large body of measures affecting the economy, some of which are binding. It is not enough to call for improved governance, or better framework conditions; political bodies also need to become more involved in this matter than they have been in the past. What we are doing here in Parliament constitutes a step in the right direction, but further steps must be taken.

There is also another aspect to consider. What is done here at the level of a regional organisation – in this case the European Union – should also be mirrored in the global context. So it is not a simply a matter of seeking to apply these rules to our region of the world alone.

  Margarita Starkevičiūtė (ALDE). – (LT) Madam President, as my colleague has already mentioned, this report deals with who is responsible for what in the accountability process. Parliament’s role is quite significant, and I believe that we should have this function too. However, I would like to express some doubt regarding the consideration of every technical detail and establishing standards. I do not find the description of the method of assessment and evaluation of realisable and non-realisable assets completely acceptable. That is why I doubt we should interfere, whether this is good or a bad method. We should wait for the experts to carry out the assessment. Meanwhile, the review of the standard of non-realisable assets and consultations on this issue has already started. Only then should we make our decision. I therefore suggest that we do not support the proposal in Article 30(e) or that in Article 42.

  Avril Doyle (PPE-DE). - Madam President, could I have assurances from Commissioner McCreevy that the single set of global accounting standards – with the consequent drive for increased standardisation of procedures – will in no way increase the justification, or even the requirement, for an EU common consolidated corporation tax base?

  Charlie McCreevy, Member of the Commission. − Madam President, I would like to thank Members for their comments. It was certainly a very wide-ranging debate with diversity of views on many of the issues and we have taken note of them.

I would like to emphasise again that high-quality international accounting standards are crucial for the effective functioning of both the European and global capital markets. The process through which these standards are developed should therefore be subject to robust governance. It should be characterised by a high level of transparency and it should ensure a balanced consideration of stakeholder interests.

The IASCF and the IASB have over recent years implemented significant reforms of their internal procedures but I cannot deny that further improvements are necessary. Moreover, I recognise that we in Europe should better organise ourselves to guide and provide input to the IASB standard-setting process. In short, even if the IASB’s governance and due process were perfect, international accounting standards will only meet the needs of European stakeholders if their views are presented in a coherent, a convincing and a timely manner.

Nearly all speakers referred to the question of IFRSs for SMEs and I repeat again that there is no legal basis for its endorsement in Europe at present. If we were to do so, it would need codecision with the European Parliament. Can I just repeat, as I have said many times about IFRSs for SMEs, when the IASB was going about this particular work I made it quite clear in a number of speeches that they should not assume that there was going to be automatic endorsement from the EU for this particular project. We would only recommend it if it was simple and effective and met the needs of SMEs.

They were told that when they were doing their work. Their first exposure draft has been presented. I then took the opportunity of telling them that it did not meet those criteria and in the present state of affairs I could not possibly even consider recommending it for SMEs because it was neither simple nor effective. That remains my position but, in line with what others have said and Mr Purvis in particular, it would probably be a good thing if there was a simple effective IFRS for SMEs – but only on that particular basis.

The idea is a good one. I do not want to knock the idea at all, but I am not going to endorse now or in the future anything for SMEs that is just more complex and which no one understands. It is not needed. I take this opportunity of repeating again in Parliament what I have said on many occasions about this.

Ms van den Burg mentioned the question of XBRL. We are working with the securities regulator to get consensus on the technical standards for business data and as a result of this dialogue the Commission may take further measures aiming at interoperability of regulatory information systems. XBRL could allow investors to take full advantage of IFRS. Any steps towards requiring the use of XBRL in the European Union should be subject to a thorough impact analysis, including the economic assessment of costs and benefits.

I have also discussed the matter with the SEC Chairman, Mr Chris Cox, during my recent visit to the United States and I support keeping this agenda point in our regulatory dialogue with the US authorities for the future. These standards will need to be internationally accepted, technologically independent and interoperable.

It is a very exciting development and I know Ms van den Burg has recently had exposure to all this. I took the same opportunity myself some months ago – getting experts to show me how it actually works. I think it is something that is quite revolutionary and something to be welcomed, but we will not do anything about it just yet until we have done other work.

Mr Mitchell made an interesting point. I think the importance of what he said was that we do not want the IASB to come and say ‘an EU body or any other body’. We want to be an internationally accepted body – because this goal is well worth pursuing – and it needs to be an independent body. I think that should be taken as read, but with proper input from the various stakeholders.

May I remind everybody in the European Union that it was the EU which gave the IASB such importance. We were the largest jurisdiction to say as from 2005 that the IFRS would become the rule for listed companies. It was some years ago that this decision was made, together with the European Parliament, and that in itself gave greater importance to the IASB and to the process.

I would say – and I have said this repeatedly to the IASB also – that road testing – you can call it impact analysis – should be done before standards are adopted, particularly by the IASB, and with input from the EU and other bodies as well. We should not be waiting until the standards are endorsed by the IASB. We had the job here of either agreeing to them or rejecting them. We do not have the role of changing them. I think that they should be road tested enough beforehand to see if there are going to be problems, rather than finding out about serious problems after the whole IASB process has been gone through. We made this point repeatedly to the IASB. Hopefully, I think the new governance structures have been appreciated by most of us.

I accept that more work needs to be done in this particular area but that will lead to fewer problems in the future. Hopefully we will arrive some day at a situation where these things will be more or less automatic and not cause any great headaches for anybody because all the work will have been done previously. We will not have difficulties then.

  Alexander Radwan, rapporteur. − (DE) Madam President, Commissioner, ladies and gentlemen, thank you very much indeed for this debate, in which the main thrust of the report has certainly received support and alternatives have been outlined in various areas.

I should like to pick up on two things. There is one point on which I am sure we all agree, and it has been made repeatedly today by speakers who fully support this general development, namely that the IFRS organisation has now taken some action, for example on governance issues, as a result of the pressure applied by this House – by the European Parliament – and by the European Union. There are times when we need to be quite blunt – and I am aware that some of my female colleagues have criticised me in that regard – because certain individuals who have appeared before this House in recent years have occasionally given the unmistakable impression that the European Parliament is of little interest to them. How little progress there has been is clear from the proposal on governance, where it is suggested that the future supervisory bodies may take advice only from persons they have appointed. All I can say is that anyone required in future to report to a parliament on how he or she voted on a particular point should make sure that a share of responsibility and a say in policy-making is part of the package. That is the first point.

How little commitment there is on the matter of impact assessments is clear from current discussions, in which the IFRS organisation is still refusing to conduct them.

Turning to the question of standards for SMEs, I have something to say to all those who believe we should introduce them on a voluntary basis. Inspired here by John Purvis – John, this is for you – I intend to quote an independent commentator. Peter Holgate, a partner in PricewaterhouseCoopers, writing in the German edition of the Financial Times, said the following:

‘I don’t take the European position all that seriously. Even if they end up not endorsing it, various countries could adopt it in their national generally accepted accounting principles. If a few major players do that you have it brought in by a different door even if the EC doesn’t want to play ball.’

At the end of the day, this means you have to assume that, once a few states have adopted these standards, you will have them imposed on a compulsory basis throughout the European Union. Such is the strategy of this organisation. PricewaterhouseCoopers has already indicated that they see this as a business model. That is why we need our own European set of standards for SMEs: we can build on the IFRS if that is appropriate but if it is not, then we will develop our own standards. It is the Commission’s responsibility to ensure that we do not have standards foisted on us through the back door, which nobody wants but which would then become generally binding.

  President. - The debate is closed.

The vote will take place today at 12 noon.

Written statements (Rule 142)

(The sitting was suspended at 11.55 a.m. and resumed at 12 noon)

IN THE CHAIR: Diana WALLIS
Vice-President