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EBA calls for IASB ‘period of calm’

Wednesday 30 November 2011 – by Andrew Hickley

The European Banking Authority has called for the International Accounting Standards Board to engage in a period of calm before engaging in any new projects to improve accountancy standards.

The IASB’s top priority should be finalising financial instruments and insurance contracts standards, the EBA said in a letter to the accounting board on Wednesday.

The IASB should not venture into new projects if there is “no strong need for change,” EBA says, advising that any new standards should be limited.

Increased attention should however be given to the conceptual framework project, which provides “an important basis and foundation for any further accounting developments”, it said.

With the IASB having now finalised a number of projects, resources should also be dedicated to ensuring that new standards are applied consistently and as intended.

“More generally, the EBA believes that the number of new projects on the agenda post-2011 should be rather limited,” said the letter, signed by EBA chairman Andrea Enria.

“Indeed, the EBA is of the view that in addition to the need to devote resources to the priority issues, there is a very urgent need for a ‘period of calm’ to enable the IASB and its IFRS Interpretation Committee in particular to carry out post-implementation reviews with a view to providing clarification and additional guidance on standards that are causing application problems.”

With an agreement to align new standards with the US Financial Accounting Standards Board having expired, in July the IASB set out a “deliberately open” consultation asking where their work should be directed over the coming years.

The European Banking Federation echoes the EBA’s calls, arguing that active projects must be completed because failure to deliver will affect both the “reputation of IASB and the future of IFRS”.

Once these projects have been completed, the IASB should be guided by “a priority of consolidating the position of IFRS as the world’s leading financial reporting standard”, it added in a letter sent on Tuesday.

Only once improvements to IFRS 4, IFRS 9 and the conceptual framework are implemented should the IASB add additional projects to its agenda.

“These projects should be limited in number and developed within a reasonable time frame in order to take into account constraints of resources and complexity of developing IFRS projects,” the EBF says, noting that the IASB’s time and resources should be more dedicated to maintaining existing IFRS and performing post-implementation reviews.

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