The IAS Regulation states that the IFRS must be applied to the consolidated financial statements of EU companies whose securities are traded on a regulated EU market. EU countries may extend the application of IFRS to consolidated financial statements and separate financial statements. The Transparency Directive (2004/109/EC), as subsequently amended, also stipulates that all issuers (including non-EU ones) whose securities are listed on a regulated market located or operating in an EU country must use IFRS.
According to the European Commission, the implementation of IFRS in the EU has had an impact on cross-border transactions, trade, the cost of capital, investor protection, confidence in financial markets and stewardship by management. However, the Commission believes that it is difficult to differentiate their impact from that of other significant factors, including other regulatory changes in the EU and internationally.
The Commission is evaluating the IAS Regulation to assess:
- IFRS's actual effects;
- how far they have met the IAS Regulation's initial objectives;
- whether these goals are still relevant; and
- any areas for improvement.
The consultation runs for 12 weeks and submissions are being accepted until 31 October 2014. The Commission will report to the EU Council of Ministers and the European Parliament on the ongoing evaluation of Regulation 1606/2002 by the end of this year.