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While the UK has decided to leave the EU, it has not yet decided to leave the world. The Brexiteers are indeed very keen to be seen as pro-free trade and pro-globalisation. Britain has already signalled support for continued use of IFRS Standards post Brexit.
However, history never develops in straight, flawless lines, so it is entirely possible that the trend towards growing global investment and trade may be interrupted. But even if the level of cross-border transactions ended up reducing, however unlikely for the long haul, the logic for common accounting standards remains compelling. Multinational corporations will continue to span the world and investors will continue to seek investment opportunities on a global basis.
Moreover, the framework for global accounting standards is already in place for much of the world, and I can’t see why anyone would want to chip away at it. Among the G20, three-quarters of the countries will be on board with domestic use of IFRS Standards when Saudi Arabia adopts next year. In Japan, the number of companies using IFRS Standards continues to rise every month. India has just taken a giant step towards IFRS adoption.
Even though the US does not permit domestic use of IFRS Standards, you have a great deal invested in our success. US investors have more than $7 trillion dollars invested in companies that report using IFRS Standards. Many American companies have subsidiaries that will be producing IFRS-compliant financial statements, while nearly 500 foreign companies listed on US markets report using our Standards.
For these reasons, the IASB is keen to keep IFRS Standards as closely converged as possible to US GAAP.”
Mr Hoogervorst summed up the completion of the main projects (Conceptual Framework and Insurance contracts). With the completion of the new insurance contracts Standard, the IASB will have filled most (but not all) of the gaps in its suite of Standards.
Mr Hoogervorst concluded: “Apart from setting high quality Standards, the IASB can do more to improve the quality of electronic financial data. We will continue to work on the IFRS Taxonomy to shore up the reliability of electronic reporting. We also believe that better structuring of the primary financial statements will contribute to the quality and comparability of the information provided by data aggregators. More generally, we will ask ourselves what impact changing patterns of data consumption and provision should have on the way we set Standards.”