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European Institutions

European InstitutionsThe structure of EU-level institutions reflects the institutions operating in the EU member states, though the high degree of economic and financial integration within the EU means that it is often difficult to separate the roles of national and EU-wide institutions.

The main professional body at the European level is the Federation des Experts Comptables Europeens (Federation of European Accountants, FEE) which brings together 45 professional institutes from 33 European countries, including all 27 EU members.

There is no EU accounting standards board. Since 2005, companies listed in the EU have been required to prepare their consolidated accounts using the IASB’s International Financial Reporting Standards (IFRS), once these standards have been endorsed by the EU. The Internal Market Directorate-General of the European Commission (DG MARKT) is responsible for drawing up proposals for EU legislation on financial reporting and auditing and, in particular, for endorsing IFRS for adoption in the EU. In deciding whether to endorse a new IFRS, the Commission takes technical advice from the European Financial Reporting Advisory Group (EFRAG), a group of private sector experts, the Accounting Regulatory Committee (ARC) , which represents the governments of EU member states, and also the Standards Advice Review Group (SARG), a group of independent experts.

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The bodies responsible for public oversight of auditors and auditing (public oversight boards or POBs) in the member states are brought together at the EU level in the European Group of Audit Oversight Bodies (EGAOB).

The network of regulatory institutions at the EU level is currently in a state of transition. Following the financial crisis, EU legislation was passed to give the three committees which had previously co-ordinated the work of national financial supervisors in the EU member states increased powers. Since 1 January 2011, the three committees have been transformed into European Supervisory Authorities (ESAs), with the European Banking Authority (EBA) covering banking regulation, the European Insurance and Occupational Pensions Authority (EIOPA) dealing with insurance and the supervision of private pension providers and the European Securities and Markets Authority (ESMA) covering securities markets.

In addition, in order to strengthen macro-prudential regulation in the EU, the European Systemic Risk Board (ERSB) has been set up to oversee the overall financial system in the EU. The ESRB is chaired by the head of the European Central Bank (ECB) and held its first meeting in January 2011.

There is a continuing debate over the division of regulatory powers between the ESRB and the three ESAs, on the one side, and the central banks and financial regulators in the EU member states on the other.

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