2006/505/EC: Commission Decision of  14 July 2006  setting up a Standards Advice Review Group to advise the Commission on the objectivity and neutrality of the European Financial Reporting Advisory Group's (EFRAG’s) opinions
Date: 2006-07-21
Institutions: European Commission
Subjects: accounting, advisory committee (EU), operation of the Institutions

21.7.2006

EN

Official Journal of the European Union

L 199/33

COMMISSION DECISION

of 14 July 2006

setting up a Standards Advice Review Group to advise the Commission on the objectivity and
neutrality of the European Financial Reporting Advisory Group's (EFRAG’s) opinions

(2006/505/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(4)

Having regard to the Treaty
Community,

establishing the European

(5)

Whereas:

As EFRAG is a private body it is important for the high
quality, transparency and credibility of the endorsement
infra-
process
structure
is
ensuring
objective and well-balanced.

to establish appropriate
that

endorsement

institutional

advice

its

context,

the Commission considers

In this
that a
Standards Advice Review Group composed of
inde-
from
representatives
pendent experts and high level
National Standard Setters should therefore be established
to serve as a body to reflect on the endorsement advice
submitted by the EFRAG with a view to assessing
whether its content is well-balanced and objective,

The high level of
transparency and comparability of
financial reporting for all publicly traded Community
companies
is necessary for building an integrated
capital market which operates effectively, smoothly and
efficiently.

HAS ADOPTED THIS DECISION:

In order to contribute to a better functioning of the
internal market Regulation (EC) No 1606/2002 of the
the Council (1) provides
European Parliament and of
listed on regulated market are
that
the companies
in
their
required to prepare
accordance with a single set of global accounting
standards,
International
refereed
Financial Reporting Standards (IFRS). The Regulation, in
its recital 10,
foresees the creation of an accounting
technical committee to provide support and expertise
to the Commission in the assessment of international
accounting standards.

consolidated accounts

commonly

to as

The European Financial Reporting Advisory Group
(EFRAG) was founded in March 2001 by the organi-
sations representing preparers, users and accountancy
professions involved in the financial reporting process;
EFRAG provides opinions on whether the standard or
interpretation to be
endorsed complies with the
Community law and, in particular, the requirements of
Regulation (EC) No 1606/2002 as regards understan-
dability, relevance, reliability and comparability as well
as the true and fair principle as set out
in Council
Directives 78/660/EEC (2) and 83/349/EEC (3).

(1) OJ L 243, 11.9.2002, p. 1.
(2) OJ L 222, 14.8.1978, p. 11. Directive as last amended by Directive
2006/43/EC of the European Parliament and of the Council
(OJ
L 157, 9.6.2006, p. 87).

(3) OJ L 193, 18.7.1983, p. 1. Directive as last amended by Directive

2006/43/EC.

Article 1

A group of non-governmental experts in accounting, hereinafter
referred to as ‘the group’, is hereby established.

Article 2

Task

The role of the group shall be to advise the Commission, before
it
takes a decision on endorsement, on whether EFRAG's
opinions on endorsement of International Financial Reporting
Standards
International
Financial Reporting Committee (IFRICs) are well-balanced and
objective.

and Interpretations by the

(IFRS)

Article 3

Membership — Appointment

1.

The group shall comprise of maximum seven members.

2.
The Commission shall appoint the members of the group
from independent experts whose experience and competence in
the accounting area, in particular in financial reporting issues,
are widely recognised at Community level. The members shall
be selected on the basis of eligible proposals
submitted
following the call for applications published on the website of
DG Internal Market and Services.

(1)

(2)

(3)

L 199/34

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Official Journal of the European Union

21.7.2006

The Commission will

3.
account when assessing applications:

take the following criteria into

— proven competence and high level

including at European and/or international
accounting area,

technical experience,
in the
level,
in particular in financial reporting issues,

Article 4

Operation

1.
The group shall be chaired by one of its members. The
chairman will be selected by a simple majority for a period of
one year.

— independence,

2.
The representative of the Commission will assist in the
meetings of the group and may take part in the debates. Other
Commission officials interested in the matters discussed by the
group may also attend its meetings.

— the need for balanced composition in terms of geographical
origin, gender (1), the functions and size of businesses or
bodies concerned.

4.
The members shall be appointed in a personal capacity
and shall advise the Commission independently of any outside
influence. The members shall not participate in the work of
EFRAG either before the appointment to the group or during
their term of office.

5. Members shall each year sign an undertaking to act in the
public interest and a declaration indicating the absence or
existence of any interest which may undermine their inde-
pendence and objectivity.

6. Members of
the group are appointed for a 3-year
renewable term of office. The rules of procedure of the group
may foresee partial replacement of the members every year in
groups of 2 or 3.

7.
In the event of resignation of a member of the group
during the term of office as well as when a member is no
longer capable of contributing effectively to the group’s deli-
berations or does not comply with the conditions set out in
paragraphs 3 and 4, or Article 287 of
the
Commission shall appoint a new member of
the group in
accordance with paragraphs 3 and 4 for the remainder of
his/her term of office.

the Treaty,

8.
The names of members appointed by the Commission
shall be published on the Internet website of the DG Internal
Market and Services. The names of members shall be collected,
processed and published in accordance with Regulation (EC) No
45/2001 of the European Parliament and of the Council (2).

Upon receiving EFRAG's opinion on endorsement of IFRS
the group shall give its advice on whether the

3.
or IFRICs,
opinion of EFRAG is objective and well-balanced.

4.
The group shall deliver its advice to the Commission
within a short time, which should not be longer than three
weeks from the date of receiving EFRAG's opinion. In excep-
tional circumstances, in particular when the issue is complex,
this period may be extended to four weeks.

The final advice of the group shall be published on the

5.
Internet website of the Commission.

6. When the group identifies a particular concern,
the
chairman of the group shall enter into a dialog with EFRAG
with a view to resolve the matter, before the group issues its
final advice. The Commission may assist
in the discussions
between the group and EFRAG with the aim to establish a
balanced solution.

7.
The Chairman of Technical Expert Group (TEG) of EFRAG
may attend the meetings of the group as an observer. The
chairman or the representative of the Commission may also
ask other experts or observers with specific competence on a
subject on the agenda to participate in the group’s deliberations
if this is useful and/or necessary.

(1) Commission Decision 2000/407/EC of 19 June 2000 relating to
gender balance within the committees and expert groups established
by it (OJ L 154, 27.6.2000, p. 34).

(2) OJ L 8, 12.1.2001, p. 1.

Information obtained by participating in the deliberations
in the opinion of the

8.
of the group shall not be divulged if,
Commission, that information relates to confidential matters.

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Official Journal of the European Union

L 199/35

Meeting expenses are reimbursed within the limits of the annual
budget allocated to the group by the responsible Commission
services.

Article 6

Applicability

The decision shall take effect on the day of its publication in the
Official Journal of the European Union.

It shall apply until 13 July 2009. The Commission shall decide
on a possible extension before that date.

Done at Brussels, 14 July 2006.

For the Commission

Charlie McCREEVY
Member of the Commission

The group shall adopt its rules of procedure on the basis
the
the

procedure

standard

adopted

rules

by

of

9.
of
Commission (1).

In addition to documents mentioned in this Article, the
10.
Commission may publish on the Internet,
in the original
language of the document concerned, any summary, conclusion,
or partial conclusion or working document of the group.

Article 5

Meeting expenses

The Commission shall reimburse travel and, where appropriate,
subsistence expenses for members, experts and observers in
connection with the group’s activities in accordance with the
Commission’s rules on the compensation of external experts.

The members, experts and observers shall not be remunerated
for the services they render.

(1) Annex III of document SEC(2005) 1004.