By Judith Ugwumadu | 13 March 2014

The European Parliament has today agreed to renew the financing of three organisations playing key roles in the development of international financial reporting and auditing standards, ensuring that the European Union continues its yearly contribution of around €8m to the process.

European legislators said they would support proposals for the European Commission’s co-financing of the International Financial Reporting Standards (IFRS) Foundation, the European Financial Reporting Advisory Group (EGRAG) and the Public Interest Oversight Board (PIOB).

The regulation will form the legal basis for the continuation of financing the IFRS Foundation and the PIOB for the next seven years. The EFRAG is to be financed for a period of three years.

The European Union will contribute around €4.3m to the IFRS Foundation (17% of its budget) each year; €3.4m to EFRAG (43% of its budget) and €0.3m to PIOB (22% of its budget).

The European Commission said: ‘It is important to formally adopt the proposed regulation as soon as possible to ensure the continuity of co-financing of these organisations by the EU.

‘The regulation will limit the financing period of EFRAG to three years in view of prospective reforms of this organisation following the recommendations [on how the EU can boost its influence in the standards setting process] presented on 12 November by Philippe Maystadt acting as special advisor to Commissioner [Michel] Barnier.’

Maystadt was appointed to review the European Union’s role in creating international accounting standards in November.

Barnier added that high-quality international financial reporting and auditing rules were of vital importance.

He stressed that that standard-setting regulatory process was not only for ‘transparency, comparability and the smooth functioning of capital markets, but also for the economy at large’.

Barnier continued: ‘The support of the European Parliament to renew the financing programme of the IFRS Foundation, EFRAG and the PIOB is an important step towards ensuring that these organisations continue to play a key role in the development of accounting and auditing standards and that the EU’s interests are properly taken into account in that process.

‘As far as EFRAG is concerned, I am particularly keen that, following last year's recommendation by Philippe Maystadt, its governance reforms are implemented adequately and without delay. I will also make sure that Parliament is properly informed on the progress achieved by EFRAG in this respect.’