ERU, Alm.del - 2017-18 - Bilag 288: Notat samt høringssvar om egnetheden af EU's regulering vedr. offentlig rapportering fra selskaber, fra erhvervsministeren

Erhvervs-, Vækst- og Eksportudvalget 2017-18
ERU Alm.del Bilag 288
Offentligt

July 2018

NOTE

July 2018

Danish response to the public consultation on Public Reporting by

companies

–

Fitness Check on the EU Framework

The Danish Government supports of the initiative of the Commission to

evaluate the relevance and the effect etc. of the EU reporting framework

on public reporting for companies. This position paper supports and par-

ticularizes the response to the consultation provided by the Danish Gov-

ernment.

The financial reporting framework applicable to all EU companies

The Danish Government believes it is important to have an EU frame-

work requiring valuable financial information to be published for the ben-

efit of investors and other users of financial information.

We would like to stress the importance of assessing the user need for fi-

nancial information from companies of different sizes. This is valuable

knowledge when deciding on the content and the form of financial report-

ing requirements.

With regard to small companies it is imperative to find the right balance

between meeting all needs that different users of financial statements

might have, on the one hand, and on the other hand not imposing adminis-

trative costs on companies that are not proportionate by requiring exces-

sive reporting. The smallest companies have the least economic resources

to provide this information and the fewest users.

The Danish Government encourages the Commission to look into alterna-

tive ways to secure publication of relevant financial information from the

smallest companies instead of a once a year publication of the financial

statements. This could be obtained through companies giving more fre-

quent public access to parts of the bookkeeping and various key figures.

Such a publication regime could secure more frequent access to relevant

data. In this case it should be a prerequisite that users of financial infor-

mation should not have less information and security for their decision-

making than today.

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The Danish Government finds no need for further harmonization in re-

gard to the smallest companies covered by the Accounting Directive. In

this segment, there is generally no need to have a high degree of compa-

rability as the smallest companies in general do not engage in cross bor-

der activity.

The Danish Government supports the Commission to endorse IFRS

for

SMEs for use in the EU. We support that IFRS for SMEs is introduced as

a company option. This would mean that companies wanting to provide

financial statements of a higher standard, e.g. ambitious growth compa-

nies, can choose to do so. The IFRS for SMEs is updated currently and it

is globally recognized. Alternatively, the Accounting Directive should be

amended in order to give companies the option to choose to prepare fi-

nancial statements in accordance with IFRS as for recognition and meas-

urement but with a reduced set of disclosure requirements.

However, the above mentioned flexibility to choose between accounting

regimes is not suitable for financial companies under supervision (banks,

insurance etc.).

The Danish Government supports that the Commission promotes the en-

dorsement of IASBs

globally recognized and applied conceptual frame-

work in the EU. The Danish government on the other hand cannot support

the development of a pan-EU conceptual framework as such a framework

will not be recognized worldwide, as this would potentially be burden-

some to companies with activities outside of the EU.

With regard to answers to questions in this section they are not entirely all

applicable to financial companies.

The EU financial reporting framework for listed companies

The Danish Government strongly supports the use of International Finan-

cial Reporting Standards (IFRS) for consolidated financial statements for

listed companies. We find it important that European entities which oper-

ate on a global market apply accounting standards which are accepted

worldwide. This view is widely shared by the Danish stakeholders.

Therefore, we also support the Member State option giving Member

States the possibility to either allow or require other entities to use IFRS.

We have used this option to allow non-financial entities to use IFRS, if

they consider it relevant, for instance to attract foreign investors or to en-

ter into other forms of long term relationships with foreign entities. For

International Financial Reporting Standards

International Accounting Standards Board

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financial institutions we have used the option to allow non-listed groups

to apply IFRS in their consolidated financial statements.

The IFRS used within the EU should be the same as the ones adopted by

the International Accounting Standards Board (IASB). We do not find it

appropriate to have special European solutions and changes to the stand-

ards, as this will threaten the very idea of global standards.

Instead, it is important that European authorities and stakeholders engage

in the work of IASB and by doing so ensure that IASB at an early stage of

the standard setting process take European interests properly into account.

Accounting in Europe should be based on the framework of IASB. Thus,

we see no need for a special European framework for accounting.

The EU financial reporting framework for banks and insurance compa-

nies

The Danish Governments would like to stress that before considering

introducing new requirements and administrative burdens it is important

to perform a REFIT exercise. New initiatives must be assessed by their

actual added value and from a proportionality perspective because new

initiatives always will incur some costs. It is also important to take into

consideration the different sizes of financial institutions in various mar-

kets.

It is appropriate and relevant to build upon existing and well-known and

acknowledged systems, including e.g. the use of IFRS that is also applied

outside the EU. Such an approach promotes competitiveness, transparen-

cy, comparability and convergence in practice and it reduces burdens

compared to establishing yet another

”local” EU-GAAP

The Danish Government is of the opinion that the existing set-up for re-

quirements on the use of IFRS is appropriate and that IFRS requirements

should not be extended to apply to smaller companies. Smaller companies

should still be allowed to apply national GAAP which is less burdensome.

It is the assessment that it is appropriate and important that financial

companies, including financial SMEs should use full IFRS in their con-

solidated financial statements if they are listed.

Furthermore, Member States should still have the option to require or

allow IFRS in the consolidated financial statements from non-listed com-

panies and in the separate financial statements from all companies.

Generally accepted accounting principles

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The IFRS for SMEs is not considered to be appropriate for financial com-

panies, which is also indicated in the standard from IASB.

The Danish Government finds it important to secure future-proof solu-

tions. This can be done by

–

among other things

–

allowing for the use of

digital solutions to the widest possible extent especially in relation to re-

porting requirements. It should also be considered to include solutions

based on the use of Artificial Intelligence. In this context it is necessary

though, to take into account that Member States are not all at the same

stage of development when it comes to IT.

A number of challenges are beyond the framework concerning financial

reporting, being challenges connected to tax conditions and therefore out

of scope of this consultation.

Non-financial reporting framework

In Denmark we have had reporting requirements on CSR since 2009. The

Danish Government believes that non-financial information (NFI) dis-

closed by companies remain relevant, but it is our experience that it takes

time for companies to adopt the sustainability and diversity agenda and to

develop reporting practices that support their business objectives.

The Danish Government is aware that some companies find it difficult to

adequately address materiality which decreases transparency and the

companies are asking for further guidelines on materiality.

Implementation of the requirements of the NFI Directive in Member

States has contributed to a common focus between Member States and

increased transparency. The directive provides the flexibility that compa-

nies want and need, due to the follow-or-explain principle. The Danish

Government would prefer to maintain the current flexibility for the com-

panies on this issue.

Furthermore, the Danish Government supports the flexibility given in the

directive to either publish NFI in the financial statements or in a separate

report. When NFI is included in the financial statements it is important

though, that only relevant NFI is included and that the information is well

structured.

The Danish Government finds that the non-binding Guidelines on Non-

Financial reporting is clarifying some of the articles in the NFI-directive.

It should be considered to expand the guidelines with more information

on how to assess materiality.

Technology

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The Danish Government supports the idea of a single European Electron-

ic Access Point (EEAP) interconnecting the different national OAMs (of-

ficial appointed mechanisms).

The Danish Government finds that the use of electronic structured report-

ing for listed companied, based on a defined taxonomy (ESEF) and a sin-

gle access point (EEAP) will improve transparency investors and the pub-

lic. However, it must be foreseen that the transformation will incur some

costs in connection with companies´ conversion.

We believe that

–

apart from financial statements also half-yearly interim

financial statements, non-financial information and country-by-country-

reports on payments to governments should contain electronic structured

data.

In Denmark we have mandatory digital filing for listed and non-listed

non-financial companies and our experience is that the transformation

from paper based filing to digital filing has taken place without causing

big problems.

If electronic structured reporting based on the EU language developed in

ESEF is extended to also encompass non-listed companies it must be se-

cured that an EU core taxonomy does not become an obstacle to the work

already carried out in this field in some Member States.

The Danish Government believes that digitalization creates a need for

securing the authenticity of electronically filed financial reports etc.

Therefor this information should be secured in some form. We do not see

the need for EU legislation prescribing which technology should be ap-

plied

–

rather what objectives must be fulfilled. New technologies like

block chain might be considered to achieve the required security.