Fitness check finds EU financial reporting fit for purpose
The European Commission has published the results of its 2018 ‘fitness check’ assessment of public reporting by EU companies. It assessed the effectiveness of the EU framework in terms of its ability to provide stakeholders with financial and non-financial information that is sufficient in terms of quantity and quality, relevant, comparable, reliable and timely. Secondarily, it also considered its contribution to broader objectives of efficient functioning of the European single market, an integrated capital market, financial stability and sustainable growth.
The report finds financial reporting – based in the International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (IASB) – broadly fit for purpose and adequately flexible for EU needs, and suggests that a consultation and analysis could be carried out on expanding its scope. It concludes: “Overall, the EU framework for corporate reporting achieves the immediate objectives to a great extent. In particular, the IAS Regulation appears to be the most effective instrument in ensuring high-quality and comparable public financial information across the EU.”
The report offers strong support for digitisation, emphasising the need for greater use of digital tools to structure, re-use, secure, disseminate and enable easier access to both financial and non-financial information. It recognises the important steps forward represented by the European Single Electronic Format (ESEF) in making reports both human and machine-readable, as well as the proposed European Single Access Point (ESAP) – as do we at XBRL International!