Clare Daly (Dublin Fingal, Independent)
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135. To ask the Minister for Finance his views that the European Union has indicated to this Deputy that it is possible to update a regulation by a later directive and that it has used this technique to justify the over-valuation of assets and the hiding of losses in Irish banks; and the circumstances in which a directive, passed after a regulation, can be used to update that regulation. [16879/16]

Michael Noonan (Limerick City, Fine Gael)
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I understand that this question relates to Regulation (EC) No 1606/2002 and the Directive is 2013/34/EU.

I have been informed by the Department of Jobs, Enterprise and Innovation that Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards was amended, in Article 3 and Article 6, by Regulation (EC) No 297/2008 of the European Parliament and of the Council of 11 March 2008. 

It was not amended by Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC. 

On the valuation of assets I have also been informed by the Department of Jobs, Enterprise and Innovation that the EU-adopted Standard relevant to the measurement of financial assets in the financial statements of banks is International Accounting Standard No. 39 (IAS 39) on Financial Instruments: Recognition and Measurement.

That Standard was adopted by means of Commission Regulation (EC) No 2086/2004 of 19 November 2004 amending Regulation (EC) No 1725/2003 on the adoption of certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards the insertion of IAS 39. This text was supported by a qualified majority of Member States at the Accounting Regulatory Committee (ARC) meeting on 1 October 2004 and by the European Parliament.

The International Accounting Standards Board has issued a Standard replacing IAS 39, International Financial Reporting Standard No. 9, Financial Instruments.  The new Standard, among other things, replaces the "incurred loss model" for assessing loan impairment with an "expected loss model". 

The Commission is proposing that the EU adopt this new IFRS 9 standard. Accordingly, the draft Regulation to give effect to that adoption will soon be considered by the European Parliament and Council.