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'Better communication' to be the theme of the second term of the IASB Chairman

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30 Jun 2016

At the IFRS Foundation's annual European Conference currently held in Zurich, IASB Chairman Hans Hoogervorst outlined plans to prioritise improvements to the communications effectiveness of financial statements.

After the usual remarks on IFRS adoption around the world, Mr Hoogervorst turned to the main message of his speech. He explained that "preparers sometimes experience financial reporting as too much of a compliance exercise and investors sometimes believe that the financial statements depict performance in an insufficiently clear manner". As he noted, valuable information gets drowned out by ‘tick the box’ disclosures and voluminous, but poorly organised and presented financial data. Mr Hoogervorst also commented on preparers presenting alternative performance measures that are not based on IFRSs to paint a rosier picture than reality. Finally, he mentioned non-financial information on, for example, sustainability issues.

To help investors see what preparers are actually saying, the IASB therefore needs to do more work to increase the communication effectiveness of financial statements, as Mr Hoogervorst said. To this end, and to make sure that financial statements communicate as clearly as possible what preparers are doing, the IASB will take a fresh look at how financial information is presented, how it is grouped together, and in what form it is made available.

The main projects Mr Hoogervorst mentioned that will contribute to this mission are the the project on primary financial statements, the disclosure initiative, and the project on financial instruments with characteristics of equity. He also promised that the IASB would have a closer look at digital reporting and non-financial reporting.

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

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