The European Financial Reporting Advisory Group, which consults to the International Accounting Standards Board in London on standard-setting, and is perceived as the European counterpart to the Financial Accounting Standards Board (although without the U.S. organization's standard-setting authority), said that it plans to triple its annual operating budget by 2010, to $9 million.A European Commission official told Accounting Today that the increase would elevate EFRAG to approximately the same level that FASB devotes to similar consulting activity on standards.
Contingent on an agreement from EFRAG's funding institutions and the commission, the upgraded budget would allow an increase in staff from its present count of eight to 25, including, for the first time, a communications manager.
EFRAG's outlines for its expansion were covered in a document titled Strengthening the European Contribution to the International Standard-Setting Process.
The document received some 25 comment letters, all expressing support for its larger budget and staff expansion, including those from the CFA Institute; KPMG; the Accounting Standards Committee of Germany; the British Association of Chartered Certified Accountants; and, for the European insurance industry, the CEA.
The proposal document stated that, until now, EFRAG's work has been concentrated on responding to proposals issued by the IASB such as discussion papers and exposure drafts of new standards, and on advising the commission on whether to endorse new reporting standards and interpretations.
Its plans for the future will concentrate more on developing its own research and discussion papers at an early stage of the IASB's consideration of the topics concerned. EFRAG furthermore would monitor current IASB activities and provide continuing feedback to the board.
Saskia Slomp, technical director of the European Federation of European Accountants, who was part of the advisory team when EFRAG was originally established, follows the opinion expressed by European Parliament that, "If we don't expand EFRAG or find another mechanism in Europe, the U.S. and other players will become so influential that they will dominate completely the IASB."
A three-tier funding model has been proposed, with input from European organizations, national funding mechanisms, and the commission. In 2009, $1.5 million was to come from European member organizations, with another $3 million from various national funding outlets.
The commission has indicated a willingness to consider contributing up to 50 percent of the budget, provided that certain reforms are carried out. However, its funding would not be available until 2010.
In a letter to "stakeholders," Göran Tidström, chairman of EFRAG's supervisory board, wrote: "As more jurisdictions, some of which are able to mobilize significant resources and financial reporting technical expertise, are moving towards IFRS, it is necessary for Europe to provide its input and advice to the IASB, particularly through stronger upstream input to the agenda-setting process."
