Slide 1 2 nd FCM Conference Athens, 22 April 2002 A View on the Future of the Profession: Standard Setting and Globalisation Developments in Professional Accounting Standard Setting – with focus on EFRAG and the accountancy profession by Göran Tidström Chairman EFRAG Supervisory Board President of FEE

Slide 2 History  FEE Discussion Paper on a Financial Reporting Strategy within Europe (1999)  IAS or US GAAP  Principle based standards Emphasis responsibility of management Require application of careful judgement Permits development of reporting in relation to business risks Keep focus on what is important  2000 Commission Communication EU Financial Reporting Strategy: the Way Forward  2001 proposed IAS Regulation

Slide 3 EFRAG – Some Facts  Publicly announced 20 March 2001  Full support and participation of all European organisations:  Preparers: UNICE (+ ERT), EBF, CEA, ESBG, GEBC  SMEs: UEAPME, EFAA  Users: FESE, EFFAS  Accountancy profession: FEE (+ ECG)  Support of national standard setters  Appointments to the Technical Expert Group on 26 June 2001  Appointment Secretary General end of October 2001 EFRAG is fully operational !

Slide 4 EFRAG – Joint Proposals Main functions:  Proactive contribution to the work of IASB and IFRIC: contribute to and influence IASB standard setting process BEFORE a standard is issued  Technical assessment of IAS/IFRS and SIC/IFRIC interpretation AFTER they are issued (endorsement advice to the Commission)  Advising on changes to the EU Accounting Directives  Implementation guidance (forum to discuss and to coordinate)

Slide 5 EFRAG - Organisation Two levels:  Technical Expert Group (TEG)  Independent experts, no representation  Work in European interest  Transparent work process – due process observed  At present 9 members  Insurance Subcommittee  Supervisory Board

Slide 6 EFRAG – Supervisory Board  Supervisory Board:  24 members from 14 countries  Chaired by Göran Tidström (FEE President – Sweden)  Guarantee representation of the full European interest  Representation of 10 founding organisations  Legitimacy  Proper geographical spread  Funding EFRAG  Monitoring EFRAG  Separate statement in case of negative advice

Slide 7 EFRAG - TEG  Monthly two days meetings  EFRAG Consultative Forum of Standard Setters  Subjects addressed include:  Due process  Modernisation of the Accounting Directives  Formats  First time application of IFRS  IASB improvements project  Accounting for share based payment  Business combinations  ED preface to International Financial Reporting Standards  ED Amendment to IAS 19  Endorsement advice on existing IFRS/IAS, SIC/IFRIC interpretations

Slide 8 Nearby Challenges of EFRAG  Endorsement advice  Financial instruments  Share based payment  Insurance (standard 2005 ?)

Slide 9 The New Europe – New challenges  EFRAG is there:  Need to succeed in supporting and influencing IASB  Balanced dialogue with US  Enabling one single set of financial statements for global use  Providing Commission and Member States with unique technical expertise

Slide 10 IFSR by 2005 ! But also  All audits to be conducted in accordance with ISA – audit reports consistents across the EU and follow ISA  Enforcement of IFSR by 2005: FEE Discussed Paper on Enforcement of IFRS within Europe

Slide 11 FEE Discussion Paper on Enforcement – Key Messages  Effective enforcement to be in place by 2005  Enforcement to be built on effective national enforcement bodies:  No enforcement body  FRRP (review panel)  EU Member States to review arrangements for enforcement  European coordination on enforcement involving all enforcement bodies (securities regulators and review panels)  Enforcement should not result in standard setting Auditors are NOT the first line of defence: it is the responsibility of management to prepare proper financial statements and other information

Slide 12 Next Steps in Addition to Enforcement and Auditing  Corporate governance  Public oversight of the accountancy profession  Auditor independence and objectivity  SMEs

Slide 13 2 nd FCM Conference Athens, 22 April 2002 A View on the Future of the Profession: Standard Setting and Globalisation Developments in Professional Accounting Standard Setting – with focus on EFRAG and the accountancy profession by Göran Tidström Chairman EFRAG Supervisory Board President of FEE