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28 Oct 2011
LATIN AMERICAN and Caribbean countries have been urged to adopt international financial reporting standards by IASB chairman Hans Hoogervorst.
Addressing a conference in Sao Paolo, the former Dutch finance minister used Brazil as a "textbook example" of how best to implement global accounting standards.
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Hoogervorst (pictured) praised the country's full adoption and decision not to "tweak" the standards, saying this means global investors are "entirely comfortable" Brazilian companies' financial statements.
"The risk premium associated with unfamiliar financial reporting requirements is eliminated, this reducing the cost of capital and attracting greater inward investment," he continued.
Stressing his affinity with the region and university Latin American studies, Hoogervorst said Brazilian moves to engage more fully with the global economy got the country "back on its feet", drawing parallels with international accounting standards.
The conference was held over two days and offered participants technical updates and an insight into the future work plan of the IASB.
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Not so fast, Mr. Hoogervorst
Being a diplomat, not a true accountant who understands the existing limited usefulness of financial reports, Mr. Hoogervorst doesn't yet grasp that uniform standards (if they existed) could neither produce "entirely comfortable" investors nor eliminate the risk premium associated with incomplete information. It is simply not enough to have everyone applying those uniform standards if said standards do not result in telling the truth, the whole truth, and nothing but the truth. Alas, today's standards are woefully incomplete, anchored in anachronistic concepts that conceal the truth about value, income, and volatility. Further, without adequate regulation and enforcement, standards are in and of themselves insufficient for any advancement, as Mr. Hoogervorst found for himself when his fellow Europeans have been all over the map in reporting the effects of the Greek debt crisis. In sum, he is one or more of the following: uninformed, deceived, disingenuous, or deceitful. Regardless of which it is, no one should place any faith in his analysis and commentary. They are more like propaganda, and transparently inadequate.
Posted by: Paul Miller, 07 Nov 2011 | 15:12