|
|
Mr Hoogervorst noted that Mexico’'s decision to adopt IFRSs in full from 2012 for listed companies made perfect sense. Business is more efficient when recognised industry standards are adopted. The same is true of financial reporting. By adopting IFRSs in full and without modification, Mexico will become fully compliant with financial reporting norms used by more than 100 countries, including two-thirds of G20 members.
A great deal of the credit for these achievements must go to the Consejo Mexicano para la Investigación y Desarrollo de Normas de Información Financiera, or CINIF. The CINIF is an important partner to the IASB.
Agenda consultation
In 2011, the IASB published for public comment a consultation document that set out some ideas, but more importantly solicited feedback on the agenda. In parallel, the Board and staff have held numerous meetings, round table discussions, webcasts and other outreach activities. For instance, a discussion forum will take place in Mexico City next Friday at the Mexican Institute of Public Accountants.
There is almost universal support for completing revisions to our conceptual framework. This framework serves as a point of reference for the IASB’s decision-making. Where choices are not clear-cut, the framework serves to encourage the IASB to make decisions that are consistent across the standards. The framework is also an important reference for companies when applying principle-based standards.
Second, it has become increasingly clear that the IASB is suffering from disclosure overload. This is not entirely due to financial reporting. The plain fact is that businesses have become more complex. It is the job of financial reporting to describe this complexity, not to mask it.
Not all disclosures provide useful information to investors. Standard boilerplate responses are more about ticking boxes than helping investors really understand what is going on under the hood of the business. This is an issue that preparers, auditors, regulators and standard-setters will have to tackle together.
The Scottish and New Zealand accounting institutes, the French Autorité des Normes Comptables, the European Financial Reporting Advisory Group (EFRAG), the UK Financial Reporting Council (FRC) and the FASB have all conducted independent research on current disclosure requirements. We will continue to work closely with them and with other colleagues as part of a project to develop a new IFRS disclosure framework.
Next, the IASB must decide what to do with Other Comprehensive Income (OCI).
OCI is increasingly used as a home for income of a less than certain nature. It is true that income reported in OCI should come with a health warning, yet investors ignore OCI at their peril.
Finally, there are a few other, less ambitious projects that the Board may well consider taking on. These include agriculture, business combinations under common control, hyperinflation and rate-regulated industries.
Strategy review
The Trustees have recently concluded a far-reaching review of the strategy and vision of the organisation. The review was conducted in parallel with a separate governance review by the IFRS Foundation Monitoring Board, which oversees the work of the Trustees. Both reviews are well worth reading.
In their report, the Trustees made a number of excellent recommendations. These include improvements to oversight of the IASB’s due process and the establishment of a dedicated research function.
However, Mr Hoogervorst believes the most important recommendation was the need for the IASB to strengthen and formalises its relationships with standard-setters, regulators and the accounting profession.