IFRS Foundation Chairman speaks at IFRS Foundation Conference in Frankfurt
Jun 27, 2012
Michel Prada, Chairman of the IFRS Foundation Trustees, addressed the IFRS Foundation Conference in Frankfurt and spoke about the past, the present, and the future of international standard setting.
Michel Prada opened his speech with an overview of the history of standard setting. He traced the beginning of the international success of International Accounting Standards (IASs) to Europe's decision in 2002 to adopt them, from 2005, for the consolidated accounts of listed companies on regulated markets: "Overnight, this transformed the IASB from an interesting but somewhat obscure accounting think-tank into Europe’s accounting standard-setter." And Prada continued to illustrate the increasing demand for global accounting standards with many examples - among them the global financial crisis that showed "the pressing need for a single set of high quality global accounting standards".
For the present, Prada drew a very positive picture pointing at the many countries around the world that require or permit the use of IFRSs, the acceptance of IFRSs among the G20 members and the use of IFRSs by almost half of Global Fortune 500 companies. He also mentioned very encouraging experiences in China and Japan.
However, Prada claimed, the IASB is currently an international standard setter, not the global standard setter. The last part of his speech he devoted to the future of standard setting. According to him, the reviews conducted by the Monitoring Board and the Trustees showed three major areas for improvement and therefore for increased success of IFRSs:
- Standard setting in co-operation with national and regional bodies with an interest in accounting standard setting will increase the effectiveness of the work of the IASB. This will also offer a better integration of the global perspective into the standard setting process and might reduce the risk of non-endorsement of a new standard.
- A stronger focus on the implementation of the standards, in part in co-operation with IOSCO and other international organisations, will ensure that standards are endorsed and enforced on a globally consistent basis.
- Enhancements to the IASB’s due process will enhance confidence in the standard setting process and will improve the robustness of the standards.
Prada closed on the note that international standard setting has made tremendous progress in the past, still does, and has a good chance of doing so in the future if the above aims are achieved.
Please click for the full text of the speech on the IASB website.