Profession must address use of boilerplate explanations in company disclosures
INTERNATIONAL accounting standards need a period of stability following a decade of unprecedented change, the chairman of International Accounting Standards Board (IASB) said.
The IASB is nearing the end of its convergence programme with US accounting standards and must now tackle company disclosure overload should be among the standard setters cherry-picked priorities, Hans Hoogervorst said in a speech in Mexico.
“Ten years ago no major economies used IFRSs. Now, more than 100 do,” Hoogervorst said. “Now we have most of the world on board, even a small change to a standard can be like dropping a pebble into still water.”
Hoogervorst said it has become increasingly clear that companies are suffering from disclosure overload.
“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,” he said.
Hoogervorst added that the IASB needs to strengthen and formalise its relationships with standard-setters, regulators and accountants.
“We have achieved great things through informal dialogue with other participants in this supply chain. However, it is now time to move from this loose affiliation to a more integrated supply chain based on strengthened and more formalised relationships,” he said.