MEPs call for investigation of IFRS reporting failures. The Telegraph reports
European politicians have called for a thorough investigation of the International Financial Reporting Standards (IFRS) Foundation after The Telegraph disclosed reporting irregularities stretching back over a decade.
Sharon Bowles, chairwoman of the European Parliament’s Econ committee, has written to Michel Barnier, the internal markets Commissioner, to raise “serious concerns” about the London-based organisation’s governance.
The Committee was poised to agree a new funding package for the IFRS Foundation and the European Financial Reporting Advisory Group (Efrag). But the MEP and Dumitru Stolojan, the committee’s vice chairman who has also signed the letter, have moved to suspend the vote until its concerns have been addressed.
“It appears that the IFRS Foundationa has been repeatedly in breach of UK company law in the past decade which is unacceptable for a recipient of EU funding,” the pair have said in their letter.
On Monday, the Telegraph reported that the foundation, which is responsible for setting accounting rules in 100 countries, had delivered late and inaccurate filings at Companies House, including registering directors who had died or long-since retired. The chaotic and potentially illegal filing record includes registering the departure of Paul Volcker, the heavyweight American economist, as a trustee almost seven years after he’d stepped down.
Tommaso Padoa-Schioppa, Italy’s former finance director, stepped down from the foundation in 2010 - but Companies House was not informed until February 2013, more than two years after he had died.
Under the Companies Act 2006, all UK firms have to notify Companies House within 21 days when directors are appointed or have their positions terminated.
The IFRS Foundation has posted an open letter on its website admitting that “in a few limited cases such notifications were not provided on a timely basis.” However, Yael Almog, executive director, said: “I do not believe that our filings have ever been ‘chaotic’.”
The foundation told The Daily Telegraph that it had not had access to Companies House online Webfiling system and instead had to file manually. “In several cases the same manual filings had to be resubmitted to Companies House. We recognise that it was our responsibility for checking that they had been processed by Companies House.” The foundation says it reviewed its systems in 2012 and is convinced that all it’s filings are now correct.
But Ms Bowles has called for a full investigation. “The Commission must investigate thoroughly the governance arrangements of the IFRS Foundation to ascertain whether there have been continued breaches of company law.”
The review is due to be chaired by Francoise Flores, chair woman of EFRAG, the body tasked with ensuring IFRS are endorsed for use in the EU, who is also a partner at Mazars. The MEPs have said that until Mr Barnier acts on both issues and “assurances have been made that European funds are not being misspent, we will advise [our] colleagues not to vote on the financial proposal.”
Article by Louise Armitstead