24 May 2012

IASB: Speech by Michel Prada at 2012 IOSCO conference in Beijing

Michel Prada, Chairman of the Board of Trustees of the IFRS Foundation, participated in the Beijing Annual Conference of IOSCO on 16 May 2012. He focused on IOSCO's work and areas where enhanced cooperation with IOSCO would be mutually beneficial.

Michel Prada mentioned in his speech how IOSCO had led the move towards global standards. Mr Prada summarised the situation with the using of IFRS in global as: “In the last 10 years we have gone from almost no economies using international accounting standards, to a world where companies in more than 100 countries, to begin with the European Union members, are required or permitted to use IFRSs. From this year, more than two-thirds of G20 countries are required to use IFRSs. In the last two years alone we have seen Brazil, Canada, Korea, Mexico and Russia all require the use of IFRSs, in full and without modification. Almost half of Global Fortune 500 companies now report using IFRSs. Therefore, it is clear today that the IFRS Foundation fits the three main criteria that any international standard-setter should meet:

1. technical credibility, due to the skills of our staff and Board members;
2. political legitimacy, due to the oversight of the Monitoring Board;
3. and accountability, due to the remarkable transparency, inclusive nature and efficiency of our due process.”

On behalf of the Trustees work in progress he mentioned: “The Trustees have recently completed a wide-reaching strategy review that considered the mission, governance, standard-setting process and financing of the organisation. At the same time, the IFRS Foundation Monitoring Board, to whom the Trustees report, conducted its own independent review of institutional governance arrangements. Both reports were published jointly in February this year and both reports are required reading for anyone with an interest in the future direction of financial reporting."

The Trustees’ strategy review makes a number of excellent recommendations. In Mr. Prada's view, one of the most important, and the one that is most relevant to the topics, is the intention to formalise the IASB’s relationships with others involved in the financial reporting supply chain – accounting standard-setters, audit and securities regulators and others. The purpose of this is twofold:

• The first relates to the IASB’s ability to create standards that can be applied around the world and without modification. The IASB cannot do this alone. It must find ways to work in close cooperation with standard-setting bodies around the world, to tap-into the best thinking in financial reporting, but also to make sure that jurisdictional requirements are fully taken into consideration.
• The second purpose is to improve consistency in the implementation of those standards. The IASB has been given the responsibility to develop international standards, but it does not have the authority to say how those standards should be endorsed, implemented or enforced.

As areas where enhanced cooperation with IOSCO would be mutually beneficial, Mr Prada indicated: working jointly on the post-implementation reviews of major standards, and providing more general feedback to the IASB project teams on how the standards are being implemented around the world.

Full speech

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