1. Co-ordination of IFRS in EU (CESR-Fin) and in the UK
Carol Page
Secretary, Director, Panel Operations
The Financial Reporting Review Panel (FRRP)
Part of the Financial Reporting Council (FRC)
REPARIS Workshops on Accounting and Audit Regulation, Vienna, Thursday March 15, 2006

2. FRC Organisational diagram
Accounting Investigation
and
Discipline Board
FRC
Council
Financial Reporting Review Panel
Professional Oversight Board for Accountancy
Auditing Practices Board
Accounting Standards Board
FRC established in 1990, to improve the quality of financial reporting in the UK
FRRP established in 1991 to enforce accounting standards

3. FRRP Consensual approach to enforcement
Peer review by financial reporting community
Single power to go to court to revise defective accounts – never utilised
Established as a reactive agency
Private organisation – funded by: government, accounting profession, listed companies
Communicate directly with company Chairman
Panel members –volunteers from across the financial community- lawyers, auditors, finance directors
Strong deterrent effect
12 years of operation: over 70 actions resulting in voluntary correction of accounts

4. Role of FRRP reconsidered
Post Enron
In light of IFRS Regulation 1606/2002
Recital 16
“The Commission intends to liaise with Member States, notably through the Committee of European Securities Regulators (CESR) to develop a common approach to enforcement”

5. Development of FRRP
Memorandum of Understanding with Financial Services Authority (FSA) UK Securities Regulator
Technical adviser to FSA on CESR sub-committee on enforcement (CESRfin SCE)
Welcomed as active participant in CESRfin SCE
Able to contribute directly to development of CESR Standards of Financial Information and other guidance
Two principles based standards
Changes to operations to meet requirements of Standard 1
Increased powers
Active selection
Extended remit

6. Standard No 2 ‘Co-ordination of Enforcement Activities
Enforcement remains national responsibility but need for “road map” that sets out common approach to enforcement across EU
Need to:
Demonstrate consistent application of IFRS
Discuss enforcement decisions
Share experiences – sampling approach, compliance methodologies

7. Standard No 2 Four principles
Enforcers should take account of previous decisions
Includes ex ante, ex post decisions
Recognises practicalities – timing, feasibility, early discussion

8. Principles 2 and 3
Decisions taken by enforcers to be made available to others
Private database of relevant enforcement decisions
Action and ‘no-action’ decisions
Includes ex ante, ex post decisions

9. Database
Specific cases but on a no-names basis to guarantee confidentiality
Input policies that determine database criteria
Not database of all decisions
Not a rule-book
Is a database of key decisions that are of significance because of nature, materiality, complexity, occurrence

10. Principle 4 – European Enforcers Co-ordination Sessions (EECS)
All EU national enforcers of accounting information invited to participate
Regular meetings to
Exchange views on cases
Discuss decisions taken or to be taken
Opportunity to discuss general enforcement issues – sampling, how to improve responses from companies
Not a second chamber that revises or approves

11. EECS Overall objective – improve convergence on future decisions
Efficient and flexible
Success depends on
practical co-operation of members
quality of output
Commitment to the process

12. Experience in practice
EECS sessions commenced early 2005
Attended by up to 25 EU national enforcers
Mixture of enforcement bodies – securities regulators, private bodies, semi-private organisations
Discuss decisions submitted to database
Discuss decisions to be taken, issues on the horizon
Collaborate on issues of common interest
Tour de table of enforcement activities
Guidance on sampling
Results of studies, reviews