WORKING with the IASB has proven “a struggle” for the FRC, chief executive Stephen Haddrill told a Lords committee hearing.
Haddrill (pictured) appeared alongside FRC chairman Sir Win Bischoff at the Lords Economic Affairs Committee this week, to answer questions around corporate governance and going concern after a third consultation into the controversial proposals closed.
In explaining the FRC’s progress in implementing Lord Sharman’s guidance around going concern, Haddrill said establishing a framework based on the recommendations at an international level “has been something of a struggle”.
“We’ve taken that up with the International Accounting Standards Board and we haven’t really made any progress there,” he said.
Prudence has also proved a sticking point between the national body and the international standards setter. Haddrill was forced to agree with Lord McFall’s assertion that working with IASB to change IFRS is “like pushing water uphill”.
Despite the FRC’s lobbying for prudence returned to the IASB’s conceptual framework, following the Lords committee’s 2011 report that called for the principle be re-established, Haddrill confirmed it is “early days” in terms of its reflection in accounting standards.
According to the IASB’s May board meeting update, the standard setter has tentatively decided to reintroduce prudence into the conceptual framework.
The reporting watchdog must now decide whether to press ahead to develop a “quite ground-breaking” going concern framework without international backing, something the board “is minded to do”. As the UK Corporate Governance Code operates on a comply or explain basis, companies have an opportunity to consider how to meet its requirements in an appropriate way, he said.
“Hopefully in the future we can point to the UK as best practice and persuade people to take that further forward,” he added.
Haddrill confirmed the FRC will aim to publish its final going concern policy in mid-September, ahead of the UK Corporate Governance Code’s updates going live in October.
Responding to the comments, an IASB spokesperson said the organisation appreciates “greatly” the input it receives from the FRC, through comment letters, the ASAF and other forums.
“The IASB has considered the views expressed by the FRC and others on prudence and has responded by tentatively deciding to reintroduce a reference to prudence in the conceptual framework,” they continued.
“At the same time, developing a global standard means that we also need to listen to the views of the more than 100 countries that now mandate the use of IFRS, and those views are not always consistent.”
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