Hans Hoogervorst discusses the impending European evaluation of IFRS

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01 Dec, 2014

IASB Chairman, Hans Hoogervorst gave a speech today at the European Parliament Committee for Economic and Monetary Affairs in Brussels titled 'Building a credible Capital Markets Union'. He welcomed Europe's ambition, noted the importance of proper regulation, and emphasised the importance of IFRS in attracting capital from around the world. Mr Hoogervorst also discussed the European Commission's impending evaluation of IFRS in the EU.

Mr Hoogervorst stated:

As you know, the Commission is currently evaluating the impact of IFRS in the EU. We do not expect this evaluation to say that IFRS is perfect, because we know it is not. Still, we feel pretty confident that the verdict will be that, overall, IFRS has had a positive impact on the European economy.

The IASB Chairman also discussed some potential 'critical remarks' that the Commission's report may contain and noted that the IASB will take the feedback constructively:

We acknowledge financial statements may have become too long. We are reviewing our disclosure requirements to reduce the overload of boilerplate disclosures. We understand the concerns of investors who fear unwarranted profit taking on the basis of flimsy valuations. In our new Conceptual Framework for Financial Reporting, we will make clear that prudence should be exercised to prevent overstatement of assets and profits. We are also against understatement of liabilities, which is why lease commitments need to brought to the balance sheet.

Please click for access to the full text of Mr Hoogervorst's speech on the IASB's website.

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