The use of International Financial Reporting Standards has benefited the European Union, boosting the quality and transparency of the bloc’s financial reporting, according to a joint letter from the heads of the IFRS Foundation and the International Accounting Standards Board (IASB).

The letter was sent this month to the European Commission, which has under way a consultation on the effect of IFRS in the EU. The EU adopted the use of the reporting standards in 2005. The 11-page letter, signed by IFRS Foundation Board of Trustees Chairman Michel Prada and IASB Chairman Hans Hoogervorst, said the unified financial reporting rules have had clear benefits. The IASB’s role is to develop the standards while the non-profit foundation promotes adoption of their use around the world

“Prior to the adoption of IFRS in 2005, the EU did not have a common financial reporting language, despite many years of trying without success,” Prada and Hoogervorst wrote. “The adoption of IFRS has brought positive effects in terms of the quality, transparency, and comparability of financial reporting, not only within the Union, but also globally, with no less than 114 countries now mandating the use of IFRS for all or most public companies and other major economies (notably Japan and the USA) permitting its use in certain circumstances.”

The letter was addressed to both outgoing Internal Markets Commissioner Michel Barnier and the newly approved Commissioner for Financial Stability, Financial Services and Capital Markets Lord Jonathan Hill. The new commission officially takes over in November.

The letter also indirectly counseled against modifications to the standards, as some members of European Parliament have in the past urged certain aspects of IFRS be changed, arguing the standards could lead to a skewed picture of a firm’s financial health. Prada and Hoogervorst’s letter said their research shows the adopting jurisdictions have made few modifications to the standards, and the few that have been made are seen as temporary measures during the implementation stage.

If modifications were made, “EU companies would no longer have the benefit of the global financial reporting passport that IFRS provide, including their ability to access international capital markets using their IFRS financial statements, without reconciliation to local standards. Investors would be deprived of comparable accounts and therefore essential information,” the letter said.

While the commission’s consultation was primarily intended to solicit feedback from companies that prepare financial statements and market participants, Prada and Hoogervorst said the foundation believed it was important to state its views on several key points.

The letter’s appendix said it was important that the commission not just “look back at the experience to date,” but to consider its agenda for growth and jobs during this next commission’s tenure, an agenda laid out by new Commission President Jean-Claude Juncker in July. The two cited Juncker’s stated goals of improving the investment economy, lowering the cost of raising capital in the EU, ensuring the regulatory framework promotes a resilient and stable financial services sector, and shepherding an integrated Capital Markets Union by 2019. Using IFRS can help with all of those goals by accurately depicting corporate financial health and performance, Prada and Hoogervorst maintained.

“The confidence of all users of financial statements in the transparency and integrity of these statements is critically important for the effective functioning of capital markets, efficient capital allocation, global financial stability, and sound economic growth,” the letter said.

A single set of financial reporting rules also would be crucial in creating an integrated capital markets union, they argued. “Given the global nature of capital markets and the need for comparability within the EU market to mirror internationally accepted best practice, only IFRS can provide those requirements.”

The European Commission’s consultation on the use of IFRS within the bloc is scheduled to close 7 Nov.

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