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ESMA Chair discusses enforcement of IFRS, United States adoption

  • ESMA (European Securities and Markets Authority) (dark gray) Image

13 Nov 2012

In a speech recently posted to the European Securities and Markets Authority's (ESMA's) website, Mr Steven Maijoor (ESMA Chair) has outlined his views on a number of topics, including consistent application of IFRS and the possible adoption of IFRS in the United States. On the latter point, Mr Maijoor lamented he is "personally disappointed with the lack of ambition regarding IFRS on the other side of the Atlantic".

In introducing the topic of consistent application of IFRS, Mr Maijoor noted the that "financial reporting with strong measurement principles along with entity-specific and relevant disclosures reflecting economic substance are important in underpinning market discipline" which "can only be achieved through the development and application of high quality accounting standards".

Moving onto the specific implications for IFRS, Mr Maijoor went on to say that "in order to achieve true global comparability the standards have to be enforced", and cited research showing benefits of IFRS adoption being best achieved in countries with strong legal enforcement frameworks.

In this context, Mr Maijoor discussed the European regulatory response to consistency in IFRS, and discussed the recently announced ESMA enforcement priorities which he noted is the "first time EU enforcers have agreed on common enforcement priorities highlighting the areas on which all EU enforcers will focus when reviewing 2012’s financial statements".

In discussing the "SEC non-decision on IFRS", Mr Maijoor noted the considerable patience and facilitation efforts made in supporting the United States and went on to say:

Some of the efforts to facilitate US IFRS adoption were difficult topics for the IASB’s constituents to accept, especially in Europe, but they were willing to pay the price to get the US on board. Today I cannot avoid the feeling that all these efforts do not seem to be enough which suggests that it will never be enough. I believe many people feel as I do, which is disappointment that there is no progress or clear sign of political will to keep IFRS adoption high on the agenda in the US. We have made so many far-reaching mutual decisions over the last years that it would be a shame to miss the opportunity by walking away from IFRS.

Notwithstanding this expression of hope that the United States might adopt IFRS, Mr Maijoor noted that the United State's influence in IFRS "cannot continue" and that awaiting a U.S. decision should not slow down progress with the IASB's agenda.

Whilst acknowledging convergence "will no longer drive the IASB's agenda", on the specific issue of the convergence on financial instruments impairment, Mr Maijoor held out hope for agreement between the IASB and FASB, stating "I can only say that I truly believe that where there is a will, there is a way".

Click for full transcript of the speech (links to ESMA website).

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