MONETARY FINANCIAL INSTITUTIONS AND MARKETS STATISTICS DIVISION
STATISTICS DEVELOPMENT AND COORDINATION DIVISION
M. Stubbe : 7672 7 June 2006
V. Damia : 8636
IAS and Statistics - Proposal for a common European
For consideration and approval by the CMFB
The objective of this note is to obtain the CMFB’s approval on best practices for flagging the
introduction of IAS/IFRS in statistical time series which may be affected by this introduction. For this
purpose, the first section of the note describes the background and the second section presents the
1. Following its September 2004 meeting, the Task Force on Accounting and Statistics (TFAS)
composed a list1 of statistical variables in which breaks in time series were likely to occur after the
introduction of the International Accounting Standards/International Financial Reporting Standards
(IAS/IFRS) in Europe in 2005. This list is based on studies carried out by the ECB (DG-Statistics)
and the Commission (Eurostat) and will be used as a living document, i.e. once experience with the
effects of IAS/IFRS has been built up variables can be added, amended or deleted.
2. In a first phase and in most Member States, IAS/IFRS will only be applicable to consolidated
accounts of listed enterprises. These accounts are usually not used for statistical purposes. However,
Member States may require or permit that IAS/IFRS are also applicable to individual statements,
which are often a source of statistical information. As a consequence, the risk of breaks in time series
increases when the use of IAS/IFRS is gradually extended to individual annual accounts of listed and
unlisted enterprises. Moreover, as the pace and scope of this extension may vary greatly across the
EU Member States, a further risk of loss of comparability may arise.
The list of statistics was divided into 4 categories: Structural Business, Money and Banking, Balance of
Payments/International Investment Position, and National Accounts statistics
3. The TFAS also carried out a number of tentative quantitative assessments of the impact of the switch
to IAS on statistical variables.2 Although based on only a few observations, the preliminary
conclusions are that the switch to IAS/IFRS can have a considerable impact depending on the specific
situation of each company and on the existing national accounting norms. The overall impact on the
national figures is thus difficult to predict. As a consequence, the current note puts forward some
The CMFB is asked to consider and approve the implementation of best practices for flagging the
introduction of IAS/IFRS in statistical time series which may be affected by this introduction, as
presented in Section 2 below.
II. Proposed best practices
4. Against this background, the following best practices for flagging the move to IAS in the relevant
time series could be recommended by the CMFB and implemented, where appropriate and possible,
by the compilers of statistics in Europe. In essence, they would imply placing two observation flags
with any time series affected by the move to IAS/IFRS, as follows:
the first observation flag should be placed at the date when the countries’ regulations or other
national legal provisions imposing IAS enter into force,3 and
the second observation flag should be placed at the date, from which the companies will
effectively publish their individual accounts according to IAS.
The CMFB recommends that the ECB and the Commission are responsible for the implementation of
the flagging policy on European aggregates and the NCBs and NSIs at the national level.
5. The content of the observation flags would aim at ensuring the transparency of the disseminated data,
by including the following information:
The standard(s) adopted, amended or affected, e.g. the IFRS No xxx;
The EU Directive adopted, amended or affected, where applicable;
(Optional) The possible magnitude of the impact, i.e. a quantitative relative assessment of the
impact after the adoption of the standard;4
Efforts have been also undertaken by members of the task force to search for analogous quantitative studies in the academic
literature; however, at this time, no such studies are available.
Obviously IAS/IFRS standards also influence EU accounting regulations and will most likely further do so in the near future,
e.g. through changes in the 4th and 7th Directive and in national laws based on these Directives. However, since there is a time
lag between the adoption of the Directive and the transposition of the national law, only the latter is considered there.
Countries should try to get some information on this impact by means of e.g. a specific question inserted in surveys, a priori
assessment based on the structure of the accounts of the company.
Any derogations or exceptions to the specific standard, e.g. which parts of the specific standard
are not applied, in particular due to a different legal arrangement.5
6. At the same time, the implementation of the above mentioned flagging policy is not straightforward
and users should be made aware of this. Potential complications will arise in those countries where
the adoption of IAS/IFRS is not uniform, mainly due the following three reasons: (1) some companies
use IAS in their financial statements on a voluntary basis, (2) only part of the relevant companies are
obliged to publish financial statements based on IAS/IFRS, and (3) some companies might adopt a
new standard earlier than its effective date. It is recommended in the respective observation flags that
countries refer to these differences in the adoption of IAS/IFRS.
7. It would also be helpful if these best practices were accompanied by a sufficient level of general
documentation, as follows. First, the documentation would refer to the definition of the new concepts
being measured and to a description of the deviations between the new concepts and the previous
standards and/or guidelines and practices in the statistical domain of study. Following the CMFB’s
endorsement, the TFAS may consider the creation of a template for such documentation, to be used
by all countries, the Commission (Eurostat) and the ECB (DG-Statistics).
8. Finally, there may be a need for the institutions involved to check any IT implications of the proposed
For example, in the banking statistics the introduction of the fair value option was anticipated and therefore the disclosure of
nominal value for deposits and loans was regulated in a separate ECB Regultion for MFIs.