WSS meeting sees fare-well speech by Michel Prada

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02 Oct, 2018

Michel Prada, the outgoing Chair of the IFRS Foundation Trustees took leave of the members of the world standard setters community yesterday.

In his speech, Mr Prada looked back over the long success story of IFRSs that he had been closely involved with over twenty years. As he explained, the birth of the IFRS movement began, as many other movements do, with a crisis. In the late nineties, the Asian financial crisis hit a deeply fragmented accounting world, and in May 2000 IOSCO endorsed international financial reporting standards — in a meeting chaired by Michel Prada at that time. And while the SEC realised that it needed to protect investors that were increasingly investing abroad, the Enron scandal shook belief in US GAAP, and the international community came to the conclusion that „international accounting standards could not be drafted in Connecticut“.

Mr Prada explained how the European Union decided to adopt IFRSs from 2005 and how the EU, Hong Kong, South Africa, and others led the way in global adoption. Today, Mr Prada stated, nine out of ten jurisdictions apply IFRSs, and many large jurisdictions that have not joined fully (yet) have either standards that are close to IFRSs or permit IFRSs — sometimes for certain groups only. (Mr Prada detailed the situation in China, India, Japan, and the US.) He also touched upon the topic of consistent application. While there was still much to do and while, as Mr Prada commented on one of the first adopters of IFRSs, „in Europe not everything is always easy“ these days, he concluded that IFRSs have come of age.

Looking to the future of IFRSs, Mr Prada talked about the relevance of accounting in an age of digital disruption and how IFRSs need to adapt and evolve. He also discussed broader corporate reporting and the need to cooperate globally to provide investors with a tool to assess companies performance across many fields. In this world, he maintained, IFRSs need looking after and sometimes even protection but he did not doubt their relevance.

Taking leave of the standard-setters community, he urged his audience to deepen their cooperation, to develop standards together and to solve problems together. He ended with two strong messages: „IFRSs is not merely about standards, but also about people,“ he said, and „IFRS remains a shining example of what can be achieved when people work together.“

Mr Prada's term as Chair of the Trustee's ended in December 2017 but he agreed to stay on until a successor could be found. He will hand over to the designated Chair of the Trustees, Mr Erkki Liikanen, at the Trustees' meeting in Johannesburg later this month.

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