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The Association of Chartered Certified Accountants (ACCA) is pleased to have this opportunity to comment on the above proposals.

We set out below some general observations, our answers to the specific questions raised for comment by EFRAG and then some comments on matters not covered by those questions.

General observations

We consider that the paper has concentrated too much on the working processes of EFRAG and not enough on the enhancement of its role. It might have helpfully identified firstly the key achievements of EFRAG and then those matters where more should be done in future, before moving to the measures needed to achieve them.

In our view the major achievements of EFRAG have been

• its establishment as the EU�s technical input into the development of the standards at the IASB, and

• the prompt circulation of high quality draft comments on IASB proposals to assist input from other European entities.

Three main objectives are still to be realised by EFRAG.

• It is important that EFRAG becomes more proactive to raise its profile within Europe and gain influence on the international stage. Proactive work in this context needs to be defined. We note the last two bullet points in paragraph 5 are items that could be said to be reacting to IASB proposals. We mean by proactive work the first bullet point. EFRAG could include input to IASB at an early enough stage on key issues in the forward agenda of the IASB (for example leasing) or on items not being tackled by IASB (for example a comprehensive consideration of fair value accounting). This input could include for example the results of round table discussions of interested parties, which could also help to raise EFRAG�s profile within Europe.

• A second key objective that EFRAG has not yet achieved is adequate profile and visibility among parties interested in financial reporting in Europe. The proposals in this consultative paper do not address this issue directly. EFRAG needs to be more active in making parties aware of its proposed comments on IASB proposals and in promoting debates and information on the development of the standards.

• EFRAG has not addressed reporting by small and medium size entities (SMEs). This seems a critical issue for EFRAG because of the extension of the IFRS regulation to unlisted companies and IASB�s project on the issue. This will also be continuing and not a one-off matter. IASB by setting up an SME Advisory Panel have recognised that issues concerning SMEs require particular expertise. EFRAG should have a separate panel of experts who could advise the TEG about SME matters on an ongoing basis.

We agree with the observation in paragraph 7 that the IASB�s perception is crucial for EFRAG�s work. The independence and technical integrity of the TEG are vital in this regard, and should not be put at risk by any changes made.

Our responses to the questions raised in the consultation paper are set out below.

Questions raised

1. We think that the Supervisory Board should be involved in setting the strategic orientation and objectives of EFRAG. We see this, however, not as an extension of the Board�s activities, but as part of its existing Trustee role. This involvement should be in receiving, discussing and approving a broad plan for EFRAG�s activities from the TEG and the budget that goes with that. The Supervisory Board should for example consider the priorities for the use of the resources available. They should also consider the due process for gathering and considering the views of different interest groups in Europe, especially where there are likely to be difficult and controversial issues coming up. Endorsement advice and the submission of comments to IASB should remain the decisions of the TEG, and not of the Supervisory Board. Equally we consider that the Advisory Forum suggested, and not the Supervisory Board, should be the main means of gathering the views of interest groups and assessing the impact of standards on the European business environment. We find that the current proposals risk muddling the roles of the different bodies within EFRAG.

   We do not agree that the three bullet points under paragraph 3 are matters which should be dealt with by the Supervisory Board. We have commented on the SME issue above. The other two seem technical issues which should be addressed by the TEG.

   The number of Supervisory Board meetings needed is a matter for the Board itself to judge. We have no problem in principle with fewer Board members, as long as that still provides representation for all the relevant interest groups supporting EFRAG�s work.

2. We do not agree with this proposal. Negative endorsement advice from EFRAG would be of such significance that the Supervisory Board should have the right to express their opinion in addition to that of the TEG.

1. We agree that it is important that the consultation process be broadened. It is helpful for Europe�s interaction with IASB when a greater degree of consensus develops among its key parties. By consulting with preparers, users and regulators and other relevant parties EFRAG could enhance the understanding of all the European constituencies which is more likely to encourage a European consensus on the various issues.
   
   
2. The concept of consulting experts through an Advisory Forum seems an appropriate mechanism for enhancing the quality of advice that EFRAG need to make a significant input into international standard setting. A key objective for EFRAG is to gather European views on the various proposals of the IASB and on any other proactive work undertaken. To do this the consultation process needs to be open and transparent, and so the Advisory Forum would in our view most often be in the form of an open hearing called by TEG to discuss a particular topic. The Forum is not currently well elaborated in the paper, needs further development and its form might need to be varied by TEG to make it most appropriate for the subject involved.

(a/b) The proposal does not give any rationale for the decision process to be modified. We support the existing system which requires a simple majority for most decisions of TEG, but requires overwhelming support for any negative endorsement advice. This special treatment is justified by the significant consequences of departures from IFRS vote, including the setting back of the harmonisation process, putting EU companies at a disadvantage and creating confusion among users. To change EFRAG�s constitution on this point risks sending out the message that negative endorsement advice should be made more often.

We do, however, believe that the publication of dissenting views is appropriate subject to the conditions suggested in paragraph 5, and very important to the transparency of EFRAG�s work.

1. We see the setting up of the Consultative Forum of National Standard Setters as an important contribution to enhancing the quality and credibility of a European voice in the process of producing international accounting standards. It also provides a broader consulting to help capture individual European country issues.
   
   
2. There are advantages (see Q2 above) in maximising the consensus among the views of National Standard Setters and EFRAG should take a co-ordinating role in this. Co-operation is particularly important when it comes to assembling the resources needed for proactive work (whose importance we have noted above). We support the removal on any restrictions there may be in appointing the Chairmen of National Standard Setters to TEG.

1. We agree that the European Commission should formally acknowledge EFRAG. This would help reinforce EFRAG�s credibility and its relationship with IASB and other external parties.

1. We suspect that a full-time chairman of TEG would be helpful in leading the consultation and coordination process needed within the proposed reformed structure as well as interacting with other international institutions. A higher profile for EFRAG among its European constituencies might be a result and that is an important objective. Finally, however, this should be a Supervisory Board decision after the costs and benefits of such a move have been compared to other possible uses of the resources.
2. The necessary additional resources and funding should be sought from the European Commission and secondment of staff from National Standard Setters and accounting firms.
3. The amount of the additional funding and resources needs to be established through a business plan. It is also important to develop a framework to monitor effectively the work of EFRAG through comparison with this plan.

Other comments

Our views on some other proposals included in the paper, but not covered by the questions above, are as follows:

• The selection process for TEG members should based on transparent criteria and the appointments should be of high quality candidates. Any form of �blessing� by the EU Commission for example (paragraph 8) would undermine the credibility of the process and of the independence of the TEG. A �blessing� implies a Commission veto over appointments.

• We agree that TEG meetings should be open to the public (paragraph 7).

• We agree with the proposal to increase in the time commitment of TEG members (paragraph 7).

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