Dáil Éireann Debate, Wednesday - 6 April 2016
220. Deputy Mick Wallace asked the Minister for Jobs, Enterprise and Innovation if he has updated Regulation (EC) 1606/2002, an international accounting standard, to reflect Article 4(3) of Directive 2013/34/EU; and if he will make a statement on the matter. [5556/16]
View answerRegulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards (the “IAS Regulation”) is an EU Regulation with direct effect on the companies to which it applies. It provides that certain companies must prepare consolidated financial statements (or “group financial statements”) in conformity with international accounting standards (i.e. International Financial Reporting Standards or “IFRS”), where those IFRS standards have been adopted by the European Commission. The Regulation also allows Member States to require or permit such companies to prepare their entity financial statements in conformity with IFRS and to require or permit other companies to prepare their entity and/or consolidated financial statements in conformity with IFRS. The Regulation sets out the procedure by which the Commission adopts or endorses the IFRS standards and states, in Article 3(2), that those standards can only be adopted if:
- they are not contrary to the principle set out in Article 2(3) of Directive 78/660/EEC and in Article 16(3) of Directive 83/349/EEC and are conducive to the European public good and,
- they meet the criteria of understandability, relevance, reliability and comparability required of the financial information needed for making economic decisions and assessing the stewardship of management Directives 78/660/EEC and 83/349/EEC applied to entity financial statements and consolidated financial statements respectively.
Article 2, points 3 and 4, of Directive 1978/660/EEC, stated:
3. The annual accounts shall give a true and fair view of the company’s assets, liabilities, financial position and profit or loss.
4. Where the application of the provisions of this Directive would not be sufficient to give a true and fair view within the meaning of paragraph 3, additional information must be given.
Directive 83/349/EEC applied to consolidated accounts and Article 16(3) of that Directive required such accounts to give a true and fair view.
As both Directives have been repealed and replaced by Directive 2013/34/EU, referred to as the new Accounting Directive, references in Regulation (EC) No 1606/2002 to those 2 Directives should be construed as references to the new Accounting Directive. Article 4(3) of that Directive states:
The annual financial statements shall give a true and fair view of the undertaking’s assets, liabilities, financial position and profit or loss. Where the application of this Directive would not be sufficient to give a true and fair view of the undertaking’s assets, liabilities, financial position and profit or loss, such additional information as is necessary to comply with that requirement shall be given in the notes to the financial statements.
This wording is quite similar to the wording that has been repealed.
Article 52 of Directive 2013/34/EU also provides that references to the repealed Directives are to be construed as references to Directive 2013/34/EU.
To date the European Commission has not proposed any amendment to Regulation (EC) No 1606/2002 in this regard. If it does, the proposal will be considered by the Council and the European Parliament.
