EBA欧洲银行-2009-03-2028CL-ED-10-Consolidated-Financial-Statements29_8页_161kb

CEBS Comments on Exposure Draft 10: Consolidated Financial Statements

Core Content

The Committee of European Banking Supervisors (CEBS) has provided detailed comments on the Exposure Draft 10: Consolidated Financial Statements issued by the International Accounting Standards Board (IASB). CEBS, composed of high-level representatives from banking supervisory authorities and central banks across the European Union, emphasizes the importance of improving accounting and disclosure standards for the banking and financial industry in response to the global financial crisis and the recommendations of the Financial Stability Forum (FSF) and G20.

Main Views and Key Points

1. Control Definition and Its Application

• CEBS welcomes the effort to develop a unified control definition applicable to both IAS 27 and SIC 12.
• However, they express concerns about the application of the new control definition to structured entities.
• The focus on "power to direct activities" over "risks and rewards" could lead to under-consolidation of structured entities, as the latter is less developed in the exposure draft.
• CEBS recommends incorporating risks and rewards, particularly residual risk, into the control principle.

2. De Facto Control and Legal Control

• CEBS supports the clarification that de facto control (ability to determine strategic policies) can override legal control (voting rights).
• However, they are uncertain about the conditions under which de facto control prevails over legal control, noting potential contradictions in the exposure draft.

3. Options and Convertible Instruments

• CEBS is concerned that options or convertible instruments not currently exercisable should still be considered in assessing control.
• They suggest that "other relevant facts and circumstances" should be clearly defined to determine whether an option holder has the power to direct activities.

4. Structured Entities and Their Definition

• CEBS believes that the definition of structured entities in the exposure draft requires more reflection and detail.
• They recommend field testing and a more positive and detailed definition to avoid entities bypassing the standard.

5. Disclosure Requirements

• CEBS broadly supports the disclosure requirements but suggests aggregation to ensure prominence of high-risk exposures.
• They believe the disclosure of support provided to unconsolidated structured entities (paragraph B47) is useful for users to understand potential future responsibilities.

6. Cost-Benefit of Disclosure

• CEBS asserts that reporting entities with sound management practices should have the necessary information to meet disclosure requirements.
• They believe the benefits to users outweigh the costs for entities.

7. Reputational Risk and Consolidation

• CEBS does not believe reputational risk alone is an appropriate basis for consolidation, but it should be heavily considered in the assessment of control.
• They suggest a presumption that entities establishing Special Purpose Entities (SPEs) control them, unless explicitly stated otherwise.

8. Significant Influence and Equity Method

• CEBS recommends aligning the definition of significant influence and the use of the equity method with consolidation standards.
• This would help address concerns raised about IAS 28 and ensure consistency across related standards.

Conclusion

CEBS encourages the IASB to conduct field testing and to incorporate the risks and rewards model more thoroughly into the control definition. They also stress the importance of clarity and guidance in areas such as de facto control, structured entities, and disclosure requirements. CEBS believes that a principles-based approach is essential for transparency and market discipline in the financial sector.