ASCG comments on the EFRAG Exposure Draft Due Process Procedures for the EFRAG Financial Reporting Activities

On December 30, 2024, the ASCG issued its comment letter to EFRAG on EFRAG’s Exposure Draft Due Process Procedures for the EFRAG Financial Reporting Activities.

The Exposure Draft formalizes and specifies the existing due process procedures for EFRAG’s financial reporting activities, which were previously set out in EFRAG’s Internal Rules. It follows the Due Process Procedures for Sustainability Reporting adopted in March 2023 in terms of timing and content.

The ASCG welcomes EFRAG’s efforts to formalize the Due Process Procedures (“DPP”) for EFRAG’s financial reporting pillar. The ASCG believes that the proposed DPPs meet the needs of stakeholders and, in general, appropriately reflect EFRAG’s current practice. Therefore, the ASCG broadly agrees with the proposed DPPs.

Notwithstanding the general support, the ASCG notes that certain areas in the DPP could be clearer and more precise. Overall, the ASCG recommends that EFRAG merge the DPP for financial reporting with the DPP for sustainability reporting into a single document to avoid inconsistencies and redundancies.

Furthermore, the ASCG believes that certain elements of the DPP would benefit from further clarification. In addition to streamlining and clarifying the objectives in chapter 1, the ASCG suggests laying out rules for abstentions of FRB members and adding more details on the design of the Accelerated Due Process and the prerequisites for confidential treatment of comment letters.