The European Parliament has set the cat amongst the pigeons on IFRS 8. The motion calling for an impact assessment of this deeply flawed standard, to which I referred here, was passed by the EU Parliament yesterday. There's more on this here.
I would stress, the European Parliament technically has no power to stop this process, and the IFRS has been approved by EFRAG, which is the body that reviews these things for the EU. But, having serious political opposition to this issue from the Parliament is unexpected, and I have to say welcome. It will at least delay the process of adoption. Some believe it more significant than that. I wouldn't go so far as to agree with the person who as said to me 'IFRS 8 is dead in the water'. But I suspect panic is rippling through the IASB right now.
More than that though , the passing of this resolution does these things if (and it's big if) the impact assessment is run properly, and involves consultation to ensure relevant voices are heard:
- It allows the issue of country-by-country reporting to be put back on the agenda;
- It allows the voices of the 'users' of financial statements to be better heard, and remember that some of the backers of this call in the European Parliament represent a significant proportion of the UK Stock Exchange;
- It raises question about the IFRS / US GAAP convergence programme and the desirability of that process;
- It lets the IASB framework be questioned, because if IFRS 8 sits within it then it is hard to reconcile that with the true and fair view required under EU Company Law Directives
- The question of for whose benefit financial statements are prepared is on the agenda.
These in turn open up a whole host of issues. I am unambiguous. All of these are good things. Now, let's hope the Commission does its job properly. I'm one of many who will, I suspect, want their say before IFRS 8 progresses.