Europaudvalget 2017-18
EUU Alm.del Bilag 856
Offentligt
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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
1
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
2
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
1
2
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
3
.
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.
3
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.