Chairman of the IFRS Foundation Trustees optimistic regarding convergence and adoption of IFRSs

  • Michel Prada Image

11 Mar, 2014

In a speech delivered at the 8th Annual Forum of the Gulf Cooperation Council Accounting and Auditing Organization in Riyadh, Saudi Arabia, Michel Prada, Chairman of the IFRS Foundation Trustees, outlined the progress towards IFRS as global standards and the evolution of the IASB as a global standard-setter.

Mr Prada stressed his belief that global accounting standards are essential to the correct functioning and wellbeing of the broader global economy and noted that policymakers must hold firm in their commitment to a single set of high quality standards. He underlined that we no longer lived in a time where the providers and the consumers of financial information reside within the same country and that investors today routinely sought investment and growth opportunities across the globe. As a consequence, he said, preparers and users of financial information, as well as providers of capital, would be just as likely to be located on different sides of the world as in the same jurisdiction - which for Mr Prada made "a compelling case for a single set of high quality global accounting standards".

The progress towards IFRS as global standards he measured against the number of jurisdictions that have already adopted IFRSs (more than 100) and against progress in some key jurisdictions. Regarding the possible adoption of IFRSs in Japan he stressed that a voluntary use IFRSs was already possible and that the Japanese Financial Services Authority had recently expanded the number of companies eligible to adopt IFRSs. On China Mr Prada remarked that it had already introduced accounting standards that were very similar to IFRS and he expressed the hope that India would soon follow a similar path. The convergence plan of Saudi Arabia he praised as being well underway. Even on a possible adoption of IFRSs in the United States Mr Prada was optimistic. He admitted that "progress has been slower than many of us would have wished", but he also stated that "the factors that led to the US considering adoption of IFRS have not gone away" which led him to say: "That is why I believe that the US will ultimately come on board with IFRS – although it will most likely take longer than we had hoped."

The progress towards IFRSs as global standards, Mr Prada noted, also led to the evolution of the IASB as a global standard-setter. Of the developments that illustrated this he mentioned the introduction of the Emerging Economies Group, the setting up of a working group on Sharia-compliant instruments and transactions, and the introduction of the Accounting Standards Advisory Forum (ASAF). He also pointed at the deepening of the co-operation with other international and regional organisations and cited the agreement with IOSCO signed in September 2013 and the agreement with the International Valuation Standards Council (IVSC) signed last week.

Please click for the full text of Mr Prada's speech on the IASB website.

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