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Internal Market

PR(08)55: Iceland fails to ensure that two international accounting standards apply in the Icelandic financial market

10.9.2008

The EFTA Surveillance Authority has decided to send two reasoned opinions to Iceland for failure to make Commission Regulations (EC) No 610/2007 and 611/2007 part of national law. Both regulations concern International Financial Reporting Standards (IFRSs).

“The International Financial Reporting Standards (IFRS) are important for the EU and EEA financial markets” said College Member Kurt Jaeger. “The two present infringement cases form part of the EFTA Surveillance Authority’s general surveillance of the rules of the financial market in the EEA EFTA States”.

Impairment losses on goodwill and certain financial assets

The first Regulation concerns impairment losses on goodwill and certain financial assets. An entity is required to assess goodwill for impairment at every reporting date, to assess investments in equity instruments and in financial assets carried at cost for impairment at every balance sheet date and, if required, to recognise a loss on paper at that date. The Regulation provides guidance on whether such losses on paper should be reversed in subsequent reporting if circumstances have changed.

Group and Treasury Share Transactions

The second Regulation concerns Group and Treasury Share Transactions and addresses the application of International Financial Reporting Standards in relation to share-based payment arrangements involving an entity's own equity instruments. Previously, there was no guidance on how such share-based payment arrangements should be accounted for in the entity's financial statements.

Background

The International Financial Reporting Standards (IFRS) are important for the EU and EEA financial markets. International accounting standards are adopted and used in the EEA with a view to harmonising the financial information presented by publicly traded companies. The aim of such harmonisation is to ensure a high degree of transparency and comparability of financial statements and hence an efficient functioning of the EEA capital market and of the Internal Market.

The two Regulations addressed today basically reproduce the International Financial Reporting Interpretations Committee’s (IFRIC) Interpretations 10 and 11.

Issuing a reasoned opinion is the second stage in infringement proceedings. The EFTA Surveillance Authority can bring the matter before the EFTA Court if Iceland fails to comply with the reasoned opinion within two months.

 

For further information, please contact:

Mr. Eirik Ihlen
Officer, Internal Market Affairs Directorate
Tel. (+32)(0)2 286 18 78

 




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