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IASB Chairman comments on the IASB's role in wider corporate reporting

  • IFRS - IASB Image

Nov 09, 2017

On November 9, 2017, the International Accounting Standards Board (IASB) released a speech by IASB Chairman, Hans Hoogervorst, given at a Brazilian international accounting seminar held on November 9. In his speech, Mr. Hoogervorst discussed the IASB's present initiative on better communication in financial reporting, support of implementation and application of IFRSs, and the IASB’s role in reporting that goes beyond the financial statements.

On better communication Mr. Hoogervorst offered no new insights, but confirmed that the IASB feels that it now has a good set of standards that covers the vast majority of transactions and would therefore prioritize better presentation and formatting of the information in the financial statements in the coming years, rather than developing new, big standards with focus on recognition and measurement. Similarly, on support of implementation and application, he mainly stressed the importance of the work of the IFRS Interpretations Committee, but offered no detailed insights.

Turning then to wider corporate reporting, Mr. Hoogervorst stated that the IASB is often asked questions about its role in this space and that some constituents would like the IASB to play a more central role in trying to create more uniformity in the multitude of sustainability standards. He admitted:

[T]he IASB knows that financial reporting in the narrow sense has its limitations. There are many elements of value creation which are important to the investor but which are not adequately captured in the financial statements. Investors need to understand a company’s business model and its strategy for long-term value creation. They need to understand the intangibles that are vital to their business model. And, yes, sustainability issues can also be important for long-term value creation in certain industries, just think of mining and car manufacturing.

And yet he also stated:

Let me be clear; we do not plan to get into environmental and sustainability reporting. That is not our area of expertise. There are many other players. Our remit is, and will remain, financial reporting—with focus on the participants in the capital markets. That is investors and potential creditors.

In conclusion, Mr. Hoogervorst offered that there has been a lot of development in this area since 2010 when the IASB published its Management Commentary Practice Statement and therefore, the IASB "is considering" whether to update the practice statement to capture the developments. This topic has been included on the IASB's agenda for its next meeting.

Review the full speech on the IASB's website.

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