Chairman Michel Prada speaks in Japan on globally consistent standards

  • Michel Prada Image

12 Nov, 2013

The Chairman of the Trustees, Michel Prada, gave a speech in Tokyo during the Financial Accounting Standards Foundation conference to discuss the importance of a single set of global accounting standards.

In his speech, Mr Prada expressed his concerns with jurisdictions using the ‘à la carte’ approach when adopting IFRS. He explained the ‘à la carte’ approach as jurisdictions choosing certain aspects of an IFRS standard and altering others to meet local preferences. It is his belief that everyone should fully adopt a single set of global standards in order to offer ‘true international comparability’ to investors.

In addition, Mr Prada commented on the progress towards IFRSs as global standards, which included an increase of 25 nations that required IFRS for all or most listed companies in the past five years. However, he mentioned that additional work still needs to be done concerning the adoption of a single set of standards for several large economies, such as:

  • United States — no decision by SEC on endorsing the adoption of IFRS.
  • China — convergence efforts to make its standards comparable to IFRS.
  • Japan — no mandate to full transition to IFRS.

Regarding Japan, Mr Prada noticed the positive signals of the recent months, including the final BAC report recommending a wider use of IFRS in Japan and the ordinances that were published as a result, the strong backing for IFRS by the Liberal Democratic Party, and the the new equity index the stock exchange of Tokyo and the Nikkei announced. He expressed a hope that these might lead to the adoption of full IFRSs in Japan:

We are of course, delighted to see such a number of positive steps being made to increase the number of companies using IFRS in Japan. We still hope, however, that these are seen in Japan as steps towards a full transition to IFRS as the single set of global accounting standards.

Further, Mr Prada noted the important role Japan has in the development of IFRS. Japanese officials hold important positions within the IFRS Foundation. Japan also has a voice in the Accounting Standards Advisory Forum (ASAF), where standard-setting activities are discussed with the IASB and other national standard setters.

Lastly, he emphasised the key role the IASB’s Asia-Oceania office had in linking the region into the global accounting standard-setting process.

Full text of the speech is available on the IASB website.

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