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IOSCO urges clear disclosure of accounting framework

Feb 07, 2008

The International Organization of Securities Commissions (IOSCO) – the consortium of the world's securities regulators – has published a statement urging publicly traded companies to provide investors with clear and accurate information on the accounting standards used to prepare their accounts.

In particular, IOSCO is concerned that, with the convergence of global accounting standards, investors may assume that all company accounts are generally comparable, even when they are prepared in accordance with quite different GAAPs. This commonly occurs where national standards assert that they are based on but do not fully implement International Financial Reporting Standards (IFRS). This could occur, for instance, if a jurisdiction:
  • adopts some but not all IFRSs as its national GAAP,
  • modifies an IFRS when adopting it,
  • delays adoption of a new or amended IFRS including Interpretations, or
  • changes the effective date or method of transition.
Click to Download the IOSCO Press Release, which includes the full text of the IOSCO Statement (PDF 32k). Here are the principles in the IOSCO Statement:

Companies preparing annual and interim financial statements on the basis of national standards that are modified or adapted from IFRS should include at least the following statements:

  1. A clear and unambiguous statement of the reporting framework on which the accounting policies are based;
  2. A clear statement of the company's accounting policies on all material accounting areas;
  3. An explanation of where the accounting standards that underpin the policies can be found;
  4. A statement that explains that the financial statements are in compliance with IFRS as issued by the IASB, if this is the case; and
  5. A statement that explains in what regard the standards and the reporting framework used differs from IFRS as issued by the IASB, if this is the case.
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