The European financial regulator has launched a set of protocols with a global accountants body to make accounting information better for investors and try to head off instability.
The European Securities and Markets Authority (Esma) has drawn up protocols with with IFRS Foundation – which operates the accounting standards setter, the International Accounting Standards Board (IASB).
Among the protocols are a requirement that Esma brings to the IASB’s attention “any emerging financial reporting issues arising from financial innovation and other new developments”.
Accounting standards were held up to scrutiny following the onset of the financial crisis and in 2009 the G20 called on the IASB and the US-based Financial Accounting Standards Board to improve standards on valuations and to draw up high quality global standards.
The Financial Crisis Advisory Group also called on the IASB to improve the accounting for items on or off balance sheet and related disclosures, among other measures.
One of Esma’s responsibilities is to promote consistent application of financial reporting standards.
Esma and IFRS say the statement of protocols builds on “many years of cooperation” between the two organisations.
Steven Maijoor, chair of Esma, said: “Ensuring the consistency of financial information and improving the quality of the information provided to investors is fundamental in allowing capital markets to flourish.”
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