Recital 4

(4)As well as playing a vital role in protecting shareholder and creditor interests, financial statements form the bedrock of prudential regulation in the sense that all major legislative instruments on financial services rely on company financial statements, including Regulation (EU) No 648/2012 of the European Parliament and of the Council ⁴ and Regulation (EU) No 575/2013 of the European Parliament and of the Council ⁵ . Regulators rely on accounting terminology in order to understand what risks a company is taking and therefore what is required of that company.