Elements of History

EFRAG – European Financial Reporting Advisory Group -

was established in its current legal form in 2001, following a request of the European Commission to the private sector, 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. Key milestones in the history of EFRAG are described below.

2001: Establishment of EFRAG

EFRAG membership is composed of 10 European Stakeholder organisations called "the Founding Fathers". The structure is composed of the EFRAG Supervisory Board (chaired by Göran Tidström, FEE (now Accountancy Europe), Sweden) responsible for governance and oversight of the organisation and of the EFRAG Technical Expert Group that is in charge of making decisions in all core activities of EFRAG. The EFRAG Supervisory Board members are representatives of EFRAG Member Organisations. EFRAG TEG is composed of 11 independent members. The EFRAG TEG Chairman (Johan van Helleman, Academic, the Netherlands) is a part-timer free of charge. The executive responsibility rests with a Secretary General (Paul Rutteman). The EFRAG Consultation Forum of Standard Setters (EFRAG CFSS) is established at the outset also. No meeting is held in public. On endorsement, EFRAG TEG can recommend endorsement if a simple majority in the group is in favour; EFRAG TEG can recommend to reject an IFRS only if a qualified majority of 2/3 supports the decision.

Main achievements:

- Assessing the compatibility of all existing IAS standards with the Accounting Directives;

- Providing endorsement advice "en bloc", except for IAS 39 Financial Instruments;

- Setting up EFRAG's due process (issuance of draft comment letters for public consultation);

- Starting the EFRAG Secretariat;

- IASB and CESR (now ESMA) are observers in EFRAG TEG.

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2004: First enhancement of EFRAG

A few changes are made in the governance: the Chairmen of the National Standard Setters from France, Germany and the UK become non-voting members of EFRAG TEG. The EFRAG TEG Chairmanship becomes a full time position, is combined to the EFRAG CEO responsibility, however remains free of charge to EFRAG (Stig Enevoldsen). EFRAG TEG meets in public.

Main achievements:

- Building up EFRAG's technical credibility and visibility; creation of the Advisory Fora;

- All IFRS and amendments of IAS issued so as to support first-adoption of IFRS in the EU in 2005 are considered for endorsement advice;

- Signing the "Flandres Agreement" with the National Standard Setters of France, Germany and the UK to undertake the PAAinE activities (Pro-Active Activities in Europe). First joint Research projects are carried out with National Standard Setters in Europe;

- Acknowledged at international level as a key stakeholder in the IFRS financial reporting arena;

- Acknowledged as the official technical advisor of the European Commission in the Working Arrangement signed in 2006; EFRAG is entrusted with the responsibility for assessing IFRS for endorsement from a financial reporting perspective only;

- Creation of the first National Funding Mechanisms (i.e. voluntary cash contributions to EFRAG collected at national level).

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2009: EFRAG "Plus" reform

The EFRAG "Plus" governance reform was designed so as to make EFRAG qualify for EU public funding by the European Commission. The EFRAG Supervisory Members are appointed as independent members and include four "Public policy" members nominated by the European Commission, one of which is appointed as the EFRAG Supervisory Board Chairman (Pedro Solbes up to November 2012, Hans van Damme, Acting Chairman thereafter). Partnership in Research Activities is officialised with the creation of the EFRAG Planning and Resource Committee (composed in equal numbers of EFRAG Supervisory Members and representatives of National Standard Setters in Europe and of the EFRAG TEG Chairman). The EFRAG PRC takes responsibility for making all agenda and resource allocation decisions for EFRAG ProActive Activities. Majority rules are changed in EFRAG TEG, so that endorsement decisions are made, whether positive and negative, on the basis of simple majority. In April 2010, Stig Enevoldsen hands over the responsibility of EFRAG Chairman and CEO to Françoise Flores and the Italian Standard Setter is appointed as non-voting member in EFRAG TEG. First EU funding is granted from 2010 onwards.

Main achievements:

- Significant Research activity undertaken, after first EFRAG agenda consultation;

- Providing strong European input in all projects included in the IASB-FASB convergence program, from first exposure-draft stage until completion or suspension;

- Development of EFRAG's due process with outreach initiatives, field work policy and feedback statements;

- Launching of EFRAG's permanent outreach to users;

- Establishing permanent communication with the IASB so as to provide European views throughout the standard-setting process, including after a comment letter has been submitted;

- Becoming an active member of, and contributor to, the IASB Accounting Standard Advisory Forum;

- Active contributor to Philippe Maystadt consultation on how to best enhance the influence of Europe in the development of IFRS;

- Implementation of EFRAG "Maystadt" Reform with the reform becoming effective on 31st October 2014.