25 January 2013

IASB Chairman Hoogervorst focused on the search for consistency in financial reporting

Mr Hoogervorst first discussed the main conclusion of a recent research report prepared by the Centre for Financial Analysis and Reporting Research (CeFARR) at the Cass Business School. The main conclusion of the report is that there is considerable variation in compliance with some impairment disclosure requirements across countries in Europe, suggesting uneven application of IFRS. Although consistent application of the standards is not the primary responsibility of the IASB, the IASB of course takes great interest in these findings.

Mr Hoogervorst was not surprised that the research has identified variations in the extent to which IFRSs are applied and enforced across the European Union, or that higher quality reporting is more likely in member states with a stronger regulatory environment.

Thanks to IFRS, this report is able to clearly identify indications of application problems in specific jurisdictions.  It is primarily the task of regulators and auditors to take the lead in tackling challenges with consistent application of IFRS. The IASB is taking the lead on following five areas:

• Developing principle-based standards that are capable of being applied, audited and enforced on an internationally consistent basis. Mr Hoogervorst cited deeper cooperation with organisations such as EFRAG and AOSSG, and the important role the proposed Accounting Standards Advisory Forum (ASAF) will have in 'road testing' new standards
• Completing a post implementation review of major standards and interpretations two years after they have come into effect. This review provides an important safety net, to identify and rectify unforeseen difficulties in areas such as consistency, that only come to light once the standard is used in practice. The IASB is close to completing the first of these reviews looking at IFRS on segment reporting, with business combinations being the next standard subject to review.
• Extending the scope and responsibilities of the IFRS Interpretations Committee.
• Increasing production of educational material, with education material. In December last year IASB published educational guidance on Fair Value Measurement and it is mid-way through developing similar educational guidance for Joint Arrangements.
• Expanding the cooperation with securities regulators at the international under the auspices of IOSCO and regional level with ESMA, including "possibly through some form of MoU or other formal agreement".

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