Opinion of the European Economic and Social Committee on the Proposal for a Decision of the European Parliament and of the Council of […] establishing a Community programme to support specific activities in the field of financial services, financial reporting and auditing

COM(2009) 14 final — 2009/0001 (COD)

2009/C 228/13

On 3 February 2009 the Council decided to consult the European Economic and Social Committee, under Article 95 of the Treaty establishing the European Community, on the

On 24 February 2009 the Committee Bureau instructed the Section for the Single Market, Production and Consumption to prepare the Committee’s work on the subject.

Given the urgent nature of the work, the European Economic and Social Committee appointed Mr BURANI as Rapporteur-General at its 452nd plenary session, held on 24 and 25 March 2009 (meeting of 24 March), and adopted the following opinion by 95 votes to 3 with 14 abstentions.

1.   Summary and conclusions

2.   Introduction

3.   Observations and comments

3.1   The Committee welcomes the Commission’s initiative to provide increasingly sophisticated instruments for supervising the financial sector, in line with the recommendations of the de Larosière Group. It notes, however, that there have been no innovations to the missions or functions of the three legal structures that will benefit from grants or the committees that will receive financial contributions. Thus the financial contributions serve to improve the present situation, which indicates satisfaction with the structures as such, but also the need to improve or bolster the services they provide.

3.2   The two bodies operating in the field of financial reporting, IASCF and EFRAG, are founded on high-quality international accounting standards, which are partly incorporated into Community law. According to the Commission they ensure that ‘investors, creditors and other stakeholders have access to timely, reliable and relevant information about the financial conditions of companies’. This statement is belied by the facts. Before any reforms are undertaken, decision makers must answer the question as to whether the failure was due to deficient accounting standards or to carelessly applied accounting rules.

3.2.1   In the most sensitive sector where major deficiencies were identified, i.e. the securities markets, where IASCF and EFRAG rules apply, the Commission explicitly stresses the vital importance of independence from ‘undue influence from parties with a stake’ and ‘non-diversified, voluntary funding from interested parties’ as one of the justifications for grants. The matter has been raised in the past at the ECOFIN Council and in the European Parliament. However, another question now presents itself: since these bodies require resources to carry out their sensitive function, is a ‘grant’ enough to ensure their independence? The EESC believes that this question deserves further analysis.

3.3   The same considerations apply equally to auditing regarding the grant to PIOB, the body that oversees the process leading to the adoption of ISA (International Standards for Auditing) and other public interest activities of IFAC (International Federation of Accountants). The possible introduction of ISA into Community law (Directive 2006/43/EC) justifies the interest in the neutrality of rules and the fact that the Commission is represented by two of the ten members on PIOB’s management bodies.

3.4   To conclude on the subject of ‘grants’, the EESC agrees with the Commission on the need to provide the bodies responsible for international standards with sufficient means to ensure the efficiency and independence of their work. This point is made repeatedly, in more or less explicit terms, which is a clear indication that there is an underlying problem. These bodies were established by the sectors in order to set rules and standards for the sectors themselves; they remain private sector bodies, even when these rules and standards are incorporated into public law. At this stage, it becomes difficult, within a single body, to separate the public interest from the activities carried out on behalf of the sectors which have legal control over that body.

3.5   Financial contributions for the Committees of Supervisors are specifically intended for the training of staff of national supervisory authorities and the management of information technology projects. As has already been explained, these committees are independent advisory bodies set up by the Commission and made up of the national authorities. Staff training (recommendation 19 of the de Larosière Report) and project management are undoubtedly important and are also entirely for the benefit of Member States: the EESC cannot understand why these actions should not be financed by the Member States themselves rather than from Community resources.

3.6   At the end of its proposal, the Commission mentions the need to introduce a flexibility criterion when selecting the beneficiaries of grants: further analysis of the arrangements for dealing with the crisis could reveal the need to set up new bodies or give new responsibilities to the existing ones. It might therefore prove necessary to add a new beneficiary to one that has already been identified. The EESC has no objection to this but would recall the need to avoid any unnecessary increase in the number of bodies involved in the programme. It would be better, as far as possible, to extend the functions of existing bodies.