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ESMA Chair discusses U.S. IFRS adoption, global consistency in IFRS

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03 Dec 2012

The European Securities and Markets Authority (ESMA) has released the text of a speech given by Steven Maijoor (ESMA Chair) to a recent Audit Quality Symposium held by the Canadian Public Accountability Board. In the speech, Mr Maijoor reiterated many of his previous comments, including disappointment at a lack of a decision on IFRS in the United States, and consistency in application of IFRS on a global basis.

Consistent with his earlier remarks, Mr Maijoor noted "disappointment that there is no progress or clear sign of political will to keep IFRS adoption high on the agenda in the US" and that it would be a "shame to miss the opportunity" by the United States "walking away from IFRS".

In discussing the need for consistent application of IFRS around the globe, Mr Maijoor noted this is the "prime responsibility of issuers and their auditors, securities regulators can intervene when there are violations of IFRS in published financial statements" and discussed the recent European-wide initiative to outline consistent enforcement priorities.

Broadening the theme to global enforcement, Mr Maijoor noted ESMA efforts to improve liaison with regulatory and enforcement bodies and reiterated a need for "further deepening of our international co-operation".

Highlighting outcomes from enforcement activities, Mr Maijoor noted a need for improved disclosure as it "allows issuers to provide investors with high-quality information within a principles-based environment".  He went on to comment on the importance of entities making relevant disclosure in accordance with objective-based disclosure requirements (such as found in IFRS 7 Financial Instruments: Disclosures):

However, a principles-based environment can only survive if clear and entity-specific disclosures, re-assessed at the end of each reporting period, bring useful decision-making information to investors. If not, detailed prescriptive requirements would need to be developed and we all know that what is important today will not necessarily be so in the next financial year. The only way to avoid this is for issuers to stop providing boilerplate information directly mimicking the standards.

Click for the full text of the speech (link to ESMA website).

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