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New EFRAG chief signals more political approach

THE new boss at EFRAG has signalled that the EU accounting standards advisory group will take a more political approach to its work, raising the prospect that Europe will deviate from international rules.

Wolf Klinz, chosen by the European Commission to head EFRAG’s newly reformed board, told the European Parliament’s influential economic affairs committee that the body will be more willing to change global rules to satisfy EU needs, Reuters reports.

“I do see increasingly the willingness to, if need be, defend more openly, directly, the European positions,” Klinz said. “Therefore in the future we will see differences between the proposal that comes from the IASB and the proposed final standard that will be applied in Europe. That will be the effect due to the work of EFRAG.”

EFRAG is currently being reformed with a view to strengthening the EU’s influence in international accounting standard-setting and Klinz’s comments suggests the group will move away from its technical remit and simply recommend the adoption of standards proposed by the IASB.

Klinz, a former MEP who sat on the economic affairs committee as a German Liberal until last year, also suggested that EFRAG had been seen as the IASB’s ambassador in Europe and that the EU should “use more” the fact that it provides more funds for the IASB than anyone else.

Last year, members of the committee voted to approve EU funding for the IASB, the body responsible for setting international accounting standards, with the proviso that the funding could be pulled if the standard-setter fails to meet certain conditions.

His appointment comes amid fractious relations between the IASB and EU policymakers. In February, members of economic affairs committee urged the EC to undertake a full review of the compatibility of global accounting rules with EU law after raising concerns about the legality of IFRS.

In a letter seen by Accountancy Age, MEPs Syed Kamall and Sven Giegold have called on Lord Hill, the new EU commissioner responsible for capital markets, to “ensure IFRS is fit for purpose” by investigating “widespread concerns” about conflicts between IFRS and EU law.

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