REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the activities of the IFRS Foundation, EFRAG and PIOB in 2016
Date: 2017-11-23
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: EU financing, EU office or agency, EU programme, audit, financial accounting, financial control, foundation, international standard, management accounting, standardised accounting system

EUROPEAN 
COMMISSION 

Brussels, 23.11.2017  
COM(2017) 684 final 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

on the activities of the IFRS Foundation, EFRAG and PIOB in 2016 

EN 

  EN 

 
 
 
 
 
 
1. 

PURPOSE AND SCOPE OF THE REPORT 

Regulation  No  258/2014  of  the  European  Parliament  and  of  the  Council,  which  extended  a 
Union programme to support specific activities in the field of financial reporting and auditing 
for the period from 1 January 2014 to 31 December 2020, came into force on 9 April 2014 
following its publication in the Official Journal1. 

According  to  Article  9  (3)  of  the  Regulation,  from  2015,  the  Commission  shall  prepare  an 
annual report on the activity of the beneficiaries of the programme, namely the International 
Financial  Reporting  Standards  (IFRS)  Foundation,  the  European  Financial  Reporting 
Advisory Group (EFRAG) and the Public Interest Oversight Board (PIOB). The scope of the 
report is further defined in Article 9 (4, 5 and 6) of the Regulation. 

The report covers the activities of the IFRS Foundation, EFRAG and PIOB in 2016. However, 
certain events that took place in 2017 were also mentioned where it was deemed useful for the 
purpose of this report. 

2. 

IFRS FOUNDATION 

2.1. 

General principles against which new Standards have been developed 

The  general  principles  against  which  new  standards  have  been  developed  including 
transparency,  full  and  fair  consultation  and  accountability  were  described  in  detail  in  the 
previous Commission annual report on the activities of the IFRS Foundation.2 

Following  the  publication  by  the  IASB  of  the  report  of  the  Effects  Analysis  Consultative 
Group3,  its  recommendations  were  implemented  for  the  first  time  in  the  effects  analysis 
published with the new standard IFRS 16 Leases in January 2016. 

In  2016,  the  Commission  initiated  a  discussion  on  effects  analysis  for  new  IFRS  standards 
with  fellow  members  of  the  IFRS  Foundation.  The  Monitoring  Board  concluded  this 
discussion  in  February  2017  by  agreeing  that  the  IASB  should  accompany  important 
standards  with  solid  effects  analysis.  The  Monitoring  Board  passed  this  message  to  the 
Trustees who welcomed it. Both parties agreed that conducting effects analysis was important 
for gathering support for new IFRS. 

In May 2017, the IASB issued IFRS 17 Insurance Contracts, which was accompanied by a 
separate effects analysis of the new standard. 

1 OJ L 105/1, 8.04.2014 
2 See the previous Commission report on the activities of the IFRS Foundation, EFRAG and PIOB in 2015  
http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2016:0559:FIN 
3 The Group had been established to advise the IASB on best practice in the assessment of the likely effects of a 
new standards and thus to seek to enhance the confidence in, and efficiency of, the processes. 

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2.2. 

The IASB’s key achievements in 2016 

In 2016, two major standards issued earlier by the IASB, namely IFRS 9 Financial Instruments 
and  IFRS15  Revenue  from  Contracts  with  Customers,  were  endorsed  in  the  EU.  In  January 
2016,  the  IASB  issued  another  major  standard:  IFRS  16  Leases.  In  addition,  the  IASB 
continued  to  work  on  a  number  of  other  major  projects,  in  particular  the  new  Insurance 
Contracts standard IFRS 17 that will replace the existing IFRS 4, Amendments to IFRS 4 to 
address the misalignment of application dates between IFRS 9 Financial Instruments and the 
new standard on insurance contracts (IFRS 17), the Disclosure Initiative and the Conceptual 
Framework. 

IFRS 16 Leases 

The  Board  issued  IFRS  16  Leases,  concluding  its  decade-long  effort  to  overhaul  the 
accounting for leases. IFRS 16 is a major revision of the way in which companies account for 
leases and requires all leases to be reported on a lessee’s balance sheet as assets and liabilities. 
The new Standard aims to better reflect the actual consequences of economic transactions and 
provide much-needed transparency about companies’ lease assets and liabilities, meaning that 
off-balance  sheet  lease  financing  no  longer  goes  unrecognised.  It  is  expected  to  improve 
comparability between companies that lease and those that borrow to buy. 

In its advice submitted in March 2017, EFRAG recommended endorsing IFRS 16 in the EU 
on  the  basis  of  its  conclusions  that  the  new  standard  meets  the  required  qualitative 
characteristics and is conducive to the European public good. 

Other key project achievements 

In 2016, the IASB has continued to work intensively to finalise the new standard on insurance 
contracts, which was finally issued on 18 May 2017. During re-deliberations, the IASB has 
maintained extensive dialogue with all interested parties. This project will bring much-needed 
transparency  to  the  plethora  of  accounting  practices  currently  used  throughout  the  industry. 
The new standard is expected to result in a more realistic depiction and better comparability 
of  financial  performance  of  the  insurance  industry  in  Europe  and  around  the  world.  The 
urgency  of  this  project  was  underlined  by  a  call  from  the  Financial  Stability  Board  for  the 
IASB to finalise the Insurance Standard as soon as possible4. 

In  September  2016,  the  IASB  published  amendments  to  the  existing  insurance  contracts 
Standard, IFRS 4, in order to address the temporary consequences of different effective dates 
of  IFRS  9  Financial  Instruments  (effective  date  of  1  January  2018)  and  the  new  insurance 
contracts  standard  (effective  date  of  1  January  2021).  Some  of  the  companies  that  issue 
insurance  contracts  have  expressed  concerns  about  the  need  to  implement  two  significant 
changes  in  accounting  on  different  dates.  They  also  highlighted  that  potential  increased 
accounting  volatility  could  arise  in  profit  or  loss  if  the  new  requirements  for  financial 

4 http://www.fsb.org/wp-content/uploads/September-Plenary-press-release.pdf 

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instruments  were  to  be  applied  before  the  new  requirements  for  insurance  contracts.  These 
concerns  were  also  voiced  by  EFRAG  in  its  comment  letter  on  the  Exposure  Draft  of 
Amendments  to  IFRS  4.  Consequently,  the  proposals  of  the  IASB  in  this  area  aimed  to 
address these concerns and to balance them with the needs of users of financial statements. 

Furthermore,  the  IASB  has  made  significant  progress  on  its  Disclosure  Initiative,  which 
includes a portfolio of projects undertaken with the aim of improving disclosures in financial 
reporting,  making  them  more  effective  and  thus  less  complex  and  less  voluminous  without 
compromising on the primary goal of faithfully reflecting economic reality. In this respect, the 
IASB published in March 2017 a discussion paper on the Principles of Disclosure, which is 
the cornerstone of the Disclosure Initiative. 

Finally, the IASB continued to take steps to ensure IFRS is applied on a globally consistent 
basis.  In  this  respect,  the  IASB  set  up  Transition  Resource  Groups  (TRG)  to  facilitate  the 
implementation  of  IFRS  15  Revenue  from  Contracts  with  Customers  and  IFRS  9  Financial 
Instruments.5 Another TRG is also envisaged with respect to the new standard on insurance 
contracts (IFRS 17) with an objective to provide a public forum for stakeholders to follow the 
discussion of questions raised on implementation of the standard and at the same time to help 
the IASB Board determine if any actions will be needed to address those questions.6 

2.3. 

Development of a Revised Conceptual Framework 

In 2016, the IASB continued to work on the Conceptual Framework project following  the 
publication of the Exposure Draft proposing changes to the framework and the consultation 
period. The Board expects to publish the Revised Conceptual Framework around the end of 
2017. 

The  Conceptual  Framework  describes  concepts  for  general  purpose  financial  reporting. 
Among other things, the Exposure Draft discussed prudence, faithful representation and an 
entity’s business model7. 

Prudence 

In May 2016 the Board tentatively decided to confirm that the revised Conceptual Framework 
should  include  a  reference  to  prudence  described  as  the  exercise  of  caution  when  making 
judgements under conditions of uncertainty, as proposed in the Exposure Draft. In September 
2016, the Board tentatively decided that the main body of the revised Conceptual Framework 
should  acknowledge  that,  in  some  cases,  income  may  need  to  be  treated  differently  from 
expenses and assets differently from liabilities. 

5 Revenue Transition Resource Group and Transition Resource Group for Impairment of Financial Instruments 
6 Possible actions could include providing supporting materials such as webinars, case studies and/or referral to 
the Board/or Interpretations Committee. 
7 Please refer to the previous Commission report on the activities of the IFRS Foundation, EFRAG and PIOB in 
2015 for description of these concepts as presented in the Exposure Draft.  
http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2016:0559:FIN 

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Faithful representation  

In  May  2016  the  Board  tentatively  decided  to  confirm  that  relevance  and  faithful 
representation  should  continue  to  be  identified  as  the  two  fundamental  qualitative 
characteristics of useful financial information. Furthermore, the Board tentatively decided to 
describe  measurement  uncertainty  as  a  factor  affecting  faithful  representation  and  to  clarify 
(in the basis for conclusions on the revised framework) that a trade-off can exist between the 
fundamental qualitative characteristics of relevance and faithful representation. 

Business model 

In  December  2016,  the  Board  tentatively  decided  to  confirm  the  approach  to  business 
activities  proposed  in  the  Exposure  Draft.  Specifically,  the  revised  Conceptual  Framework 
will  discuss  how  the  way  in  which  an  entity  conducts  its  business  activities  may  affect 
decisions  about  the  unit  of  account,  measurement,  and  presentation  and  disclosure,  but  will 
not introduce business activities as an overarching concept that affects all  areas of  financial 
reporting. 

3. 

3.1. 

EFRAG 

Consideration  of  the  true  and  fair  view  principle  and  strengthening  EFRAG’s 
assessments of impact of new IFRS on the public good 

EFRAG provides its input throughout the standard setting process by commenting on IASB 
proposals  and  by  providing  proactive  work  to  stimulate  a  debate  in  Europe  on  important 
accounting  issues.  The  commenting  and  proactive  activities  are  essential  for  ensuring  that 
European views on the development of financial reporting are properly and clearly articulated 
in  the  standard  setting  process  with  the  objective  that  the  resulting  standards  are  fit  for 
Europe. 

Following  the  governance  reform  implemented  in  2014,  EFRAG  continued  to  carry  out 
endorsement  assessments  on  whether  IFRS  were  meeting  all  technical  criteria  of  the  IAS 
Regulation, including the true and fair view principle, and also strengthened its assessment on 
whether new or proposed financial reporting requirements were conducive to the public good. 
In 2016, EFRAG, assisted by the Commission staff, has further developed its impact analysis 
methodology. In this respect, EFRAG's first fully-fledged impact analysis was conducted as 
part of its endorsement advice on IFRS 16 Leases, which will serve as a pilot case to further 
build EFRAG's capabilities and experience in this area. 

In 2016, EFRAG's work was focused on endorsement advice on two major standards: IFRS 
16 Leases and Amendments to IFRS 4: Applying IFRS 9 Financial Instruments with IFRS 4 
Insurance Contracts. In both cases, EFRAG provided its final endorsement advice in 2017. 

The  endorsement  advice  on  IFRS  16  Leases  was  supported  by  a  robust  impact  analysis 
covering specific issues identified by the Commission in its request for endorsement advice. 

5 

 
 
 
information  for  decision-making  and 

In this respect, EFRAG assessed that IFRS 16 would improve financial reporting and would 
reach  an  acceptable  trade-off  between  the  benefits  to  the  European  economy  of  greater 
transparency  and  better 
the  associated  costs. 
Furthermore,  EFRAG  does  not  anticipate  that  IFRS  16  will  have  any  material  effect  on 
entities' access to and the pricing of leasing as a source of finance. EFRAG has assessed that 
IFRS 16 is likely to have some negative effect on the leasing industry as a result of lessees 
switching  to  alternative  forms  of  finance  but  that  the  impact  should  be  limited.  Overall, 
EFRAG  has  assessed  that  IFRS  16  is  not  expected  to  have  a  material  adverse  or 
disproportionate impact on the SME sector in Europe.  Based on its own work and the input 
provided by the European Central Bank, EFRAG has assessed that IFRS 16 is not expected to 
pose  a  risk  to  financial  stability  in  Europe.  Finally  EFRAG  has  assessed  that  EU  entities 
would not be at an overall disadvantage in relation to their competitors that apply US GAAP. 
Accordingly, EFRAG concluded that endorsing IFRS 16 is conducive to the European public 
good. 

In addition, EFRAG provided the Commission with an endorsement advice on amendments to 
IFRS  4  Insurance  Contracts  addressing  temporary  consequences  of  the  different  effective 
dates of IFRS 9 Financial Instruments and the upcoming new standard on insurance contracts. 
While EFRAG concluded that overall these amendments would be conducive to the European 
public  good,  it  noted  that  they  did  not  address  the  cost  concerns  of  many  entities  which 
undertake insurance activities but are not predominant insurers. Therefore EFRAG could not 
exclude  that  the  scope  of  these  amendments  could  create  a  competition  issue.    However,  it 
was  not  in  a  position  to  conclude  on  whether  such  an  issue  could  be  material  from  an 
economic perspective. 

On  29  June  2017,  Member  States  in  the  Accounting  Regulatory  Committee  gave  a  positive 
opinion on a Commission Regulation adopting IFRS 16 Leases. The Committee also gave a 
positive  opinion  on  a  Commission  Regulation  adopting  the  IASB  Amendments  to  IFRS  4 
Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts together with an EU 
extension  of  scope  permitting  insurance  sectors  within  financial  conglomerates  to  defer  the 
application  of  IFRS  9  until  1  January  2021  at  the  latest.  This  allows  insurance  companies, 
whether  they  are  part  of  a  predominant  insurance  group  or  part  of  a  financial  conglomerate 
(banque-assurance  group),  to  introduce  IFRS  9  at  the  same  time  as  the  new  standard  on 
insurance  contracts,  IFRS  17.  By  providing  equal  treatment  of  insurance  companies, 
irrespective of legal structure, the regulation will ensure that insurers across Europe will be on 
a level playing field and avoid competitive distortions. 

3.2. 

Consideration of the diversity of accounting and economic models and views in 
the European Union 

EFRAG has put in place a due process, which allows all European constituents to put forward 
their  views  for  consideration  by  EFRAG  and  ensures  that  the  diversity  of  accounting  and 
economic models and views in Europe are taken into account and that the new IFRS respond 

6 

 
 
to  the  Union's  needs8.  Following  the  reform,  there  has  been  an  increased  focus  on 
transparency of meetings of EFRAG Board and EFRAG Technical Expert Group (TEG)9. 

3.3. 

Implementation  of  the  governance  reform  following  recommendation  of  the 
Maystadt report  

The governance reform of EFRAG, which was implemented on 31 October 2014, increased 
the  legitimacy  and  representativeness  of  the  organisation  and  resulted  in  a  more  cohesive 
process for the participation of the EU in the standard setting process. On 1 July 2016, Jean-
Paul Gauzès, former Member of the European Parliament, was appointed as President of the 
EFRAG  Board.  His  nomination  by  Commission  had  been  endorsed  by  the  European 
Parliament and the Council. In 2016, EFRAG reached all its conclusions on a consensus basis 
without having to resort to voting. The implementation of EFRAG's communication strategy, 
supported  by  a  team  that  was  put  in  place  under  the  leadership  of  the  EFRAG  Board 
President, is expected to enhance the visibility and credibility of EFRAG. 

With  EFRAG  Board  rotation  set  to  take  place  in  November  2017,  EFRAG  is  currently 
seeking to broaden its membership among European organisations and National organisations 
with  an  interest  in  financial  reporting.  Furthermore,  with  a  view  to  promoting  broader 
representativeness of the EFRAG Board, the General Assembly of EFRAG at its meeting on 
12 April 2017 decided to tighten EFRAG Internal Rules so that a maximum of three EFRAG 
Board members can have the same nationality. 

On  13  April  2016  the  Commission  proposed  to  Council  and  Parliament  to  extend  the 
financing  of  EFRAG  for  the  period  2017-202010.  Following  successful  negotiations,  the 
extension of financing of EFRAG was finally approved on 17 May 201711. 

4. 

PIOB - DEVELOPMENTS IN THE DIVERSIFICATION OF FUNDING IN 2016 

The PIOB is responsible primarily for overseeing the IFAC (The International Federation of 
Accountants) Boards responsible for the development and approval of international standards 
and the Code of Ethics for auditors.  Of particular importance are the International Standards 
on Auditing (ISAs) which the Commission may adopt to be used all over the EU. The final 
objective for the PIOB is to ensure that those standards are developed in the public interest. 

In  order  to  properly  carry  out  this  essential  public-interest  function  it  will  be  important  to 
ensure  that  the  funding  of  the  institution  is  designed  as  to  preserve  its  real  and  perceived 
independence.  To  achieve  this  objective,  proper  diversification  of  stable  funding  sources 
would  help  not  only  to  preserve  its  continuity  but  also  to  guarantee  that  independence.  The 

8 See the previous Commission report on the activities of the IFRS Foundation, EFRAG and PIOB in 2015  
http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2016:0559:FIN 
9  Meetings  of  the  EFRAG  Board  and  EFRAG  TEG  are  held  in  public.  The  supporting  documents  and  the 
summaries of those meetings are made available on EFRAG's website. 
10 https://ec.europa.eu/transparency/regdoc/rep/1/2016/EN/1-2016-202-EN-F1-1.PDF 
11 http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32017R0827&from=EN 

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importance  of  funding  diversification  was  already  recognised  in  the  IFAC  reform  of  2003 
which  was  at  the  origin  of  the  current  international  standard  setting  system,  including  the 
PIOB. 

Since its creation in 2005 until  2010, when the  Community  funding  programme  established 
by Decision 716/2009/EC became operative, the PIOB, apart from some in-kind contributions 
by Spain (the PIOB is based in Madrid), was financed exclusively by IFAC. 

The  funds  made  available  by  IFAC  in  a  given  year  constitute  a  maximum  guaranteed 
contribution which is made available to the PIOB without any further interference from IFAC. 
The non-IFAC contributions substitute and thus reduce the IFAC contribution for that specific 
year. Ideally the IFAC funding portion of the total PIOB annual expenses should be less than 
half of the total. 

The EU contribution in the period 2010-2016 has encouraged other potential donors to make 
also their own contributions. In year 2016, as shown in page in page 1 of its 2016 financial 
statements,  the  PIOB  revenues  amounted  to  EUR  1,563,565.  IFAC  provided  EUR  914,758 
which represents 58.50% of the total.  

The European Commission provided EUR 318,000 (EUR 312,000 in 2015), which represents 
20.34%  of  the  total.  The  Abu  Dhabi  Accountability  Authority  provided,  as  in  2015,  EUR 
120,000,  which  represents  7.67%  of  the  total.  IOSCO,  also  as  in  2015,  provided  EUR 
100,000, which represents 6.40% of the total. The Bank for International Settlements, kept its 
contribution  of  EUR  23,000,  which  represents  1.48%  of  the  total.  The  UK  Financial 
Reporting  Council  provided,  as  in  2015,  EUR  40,000  which  represents  2.56%  of  the  total. 
Finally, the CFA Institute has provided for the first time a contribution which amount to EUR 
45,000, representing 2.88% of the total. The balance EUR 2,807 represents interest income. 

The IFAC contribution of 58.50% of the total PIOB funding in 2016 is a little lower than that 
of 2015 (60,67%), and very similar to that of 2014 (58.19%). Something that goes in the right 
direction. 

Article 9.5 of the Regulation stipulates that if funding by IFAC in a given year reaches more 
than two-thirds of the total annual PIOB funding, the Commission shall  propose  to  limit its 
annual contribution for that year to a maximum of EUR 300,000. In year 2016 (as in 2014 and 
2015),  this  has  not  been  the  case  and  therefore,  as  the  critical  threshold  stipulated  in  the 
Regulation  (66.66%)  has  not  been  reached  by  the  IFAC  funding,  the  Commission  does  not 
need to review its 2016 contribution to the PIOB. 

5. 

CONCLUSIONS 

IFRS Foundation 
In  January  2016,  the  IASB  issued  another  major  standard:  IFRS  16  Leases  concluding  its 
decade-long  effort  to  overhaul  the  accounting  for  leases  and  in  September  2016,  the  Board 

8 

 
 
 
published  Amendments  to  IFRS  4  Insurance  Contracts.  In  addition,  the  IASB  continued  to 
work on a number of other major projects, in particular the new Insurance Contracts (IFRS 17 
finalised in May 2017), the Disclosure Initiative and the Conceptual Framework. 

In respect of whether IFRS:  
• 

take due account of different business models: IFRS 9, which was endorsed in the EU in 
November 2016, explicitly recognises the importance of business models in determining 
measurement  of  financial  instruments.  The  Commission  is  committed  to  monitoring 
closely  the  impact  of  IFRS  912  to  ensure  that  it  serves  the  EU  long-term  investment 
strategy13.  In  this  respect,  the  Commission  sent  to  EFRAG  in  May  2017  a  request  for 
technical advice on the accounting treatment of equity instruments under IFRS 9 from a 
long-term  investment  perspective.  In  a  first  phase,  the  Commission  has  requested 
EFRAG to conduct some fact finding in this area by the end of 2017 in order to evaluate 
the  possible  impact  of  IFRS  9  on  long-term  investments.  In  a  second  phase,  the 
Commission has asked EFRAG by mid-2018 to identify whether and how IFRS 9 could 
be  improved  with  respect  to  accounting  treatment  of  equity  instruments  held  as  long-
term  investments.  Furthermore,  the  amendments  to  IFRS  4  address  the  issue  of 
misalignment  of  application  dates  between  IFRS  9  Financial  Instruments  and  the  new 
standard  on  insurance  contracts  (IFRS  17),  which  is  of  particular  importance  for  the 
insurance  industry.  Finally,  the  Conceptual  Framework  gives  business  models  more 
emphasis. 
reflect the actual consequences of economic transactions: IFRS 16 seeks to better reflect 
the  actual  consequences  of  economic 
transactions  and  provide  much-needed 
transparency about companies’ lease assets and liabilities. IFRS 17 Insurance Contracts 
is  also  expected  to  provide  a  realistic  depiction  and  better  comparability  of  financial 
performance of the insurance industry across different constituencies. This issue will be 
looked at in detail by EFRAG as part of its work on the endorsement advice on the new 
standard. 
are  not  overly  complex:  IFRS  9  is  a  complex  standard  however  it  has  introduced 
simplifications in the accounting for financial instruments. In EFRAG’s view, presented 
in  the  endorsement  advice,  IFRS  9  does  not  contain  any  complexity  that  may  impair 
understandability.  Furthermore,  it  is  noted  that  the  Disclosure  Initiative  is  expected  to 
further  contribute  to  the  objective  of  achieving  less  complex  and  voluminous  financial 
reporting. 
avoid artificial short-term and volatility biases: As regards IFRS 17 Insurance Contracts, 
the Commission with the help of EFRAG will look at this aspect during the endorsement 
process following the publication of the standard by the IASB. 

• 

• 

• 

response  of 

the  Commission 

12  See 
http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?lang=en&reference=2016/2898(RSP)#tab-0 
13    See  Commission  Staff  Working  Document  accompanying  the  Communication  of  the  Commission  on  the 
Mid-Term Review of the Capital Markets Union Action Plan 
https://ec.europa.eu/info/sites/info/files/staff-working-document-cmu-mid-term-review-june2017_en.pdf 

the  European  Parliament's 

resolution  on 

IFRS  9 

to 

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As  far  as  the  Conceptual  Framework  is  concerned,  the  Commission  reiterates  its  support  to 
the re-introduction of the concept of prudence and will closely follow the final phase of this 
project. 

Finally,  the  Commission  welcomes  the  effects  analysis,  which  accompanied  two  new  major 
standards IFRS 16 and IFRS 17 and invites the IASB to continue to develop their analysis of 
impact of new or amended standards. 

EFRAG 
Following the implementation of its governance reform and the appointment of the President 
of  its  Board,  EFRAG  has  strengthened  the  legitimacy  of  its  positions  and  significantly 
contributed to the objective of Europe speaking with one voice. 

EFRAG  continued  to  take  account  in  its  endorsement  assessments  of  whether  IFRS  were 
meeting all technical criteria of the IAS Regulation and strengthened its scope of assessment 
of whether new or proposed financial reporting requirements are conducive to the European 
public good. 

The  Commission  has  appreciated  the  comprehensive  effects  analysis,  which  supported 
EFRAG's endorsement advice on IFRS 16 Leases, and encourages EFRAG to further develop 
its capacities in this area. 

Thanks to its extensive due process, EFRAG was in a position to provide adequate assessment 
of  whether  draft,  new  or  amended  IFRS  responded  to  the  Union’s  needs  while  taking  into 
account the diversity of accounting and economic models and views in the EU. 

PIOB 
Regarding  the  PIOB,  the  diversification  of  funding  sources  has  continued  with  the 
incorporation of the CFA Institute as a donor. The total portion of revenue sources provided 
by  IFAC  in  2016,  as  shown  in  page  1  of  its  2016  financial  statements,  is  58.50  %  what  is 
lower  than  in  2015  (60.67%)  and  well  below  the  two-thirds  threshold  stipulated  in  the 
Regulation. 

For  the  coming  years,  the  Commission  will  continue  monitoring  the  funding  developments 
and will cooperate with other interested potential donors, in particular with other Monitoring 
Group  members,  to  ensure  that  the  PIOB  benefits  from  a  clear,  stable,  diversified  and 
adequate  funding  system  so  that  it  can  accomplish  its  public  interest  mission  in  an 
independent, sustainable and efficient manner. 

10