ECON exchange of views with Hans Hoogervorst and Michel Prada

  • IASB (International Accounting Standards Board) (blue) Image
  • European Union Image

26 Jan 2017

At the annual exchange of views between the Committee on Economic and Monetary Affairs (ECON) of the European Parliament and representatives of the IASB and the IFRS Foundation, IASB Chairman Hoogervorst and Michel Prada, Chairman of the IFRS Foundation Trustees, stood ready to answer questions of the Parliamentarians.

The session began with re-elected ECON Chairman Roberto Gualteri welcoming Mr Hoogervorst and Mr Prada and stressing that relations between the European Parliament and the IASB had markedly improved over the last few years, which he took to be a good sign.

Mr Hoogervorst then made a few short introductory remarks mainly on the forthcoming new standard on insurance contracts (currently expected in May 2017), on which he also promised a full-fledged effect analysis, and on the better communication theme the IASB has set for its work programme 2017-2021. Regarding the latter, he expanded on performance reporting, non-GAAP measures, primary financial statements, digital reporting, and, to a certain extent, integrated reporting.

Afterwards, there was a broad range of questions from the Parliamentarians ranging from very broad to very detailed. There were for example questions regarding whether the election of Mr Trump in the United States would have an effect on the international financial reporting landscape (Mr Hoogervorst responded that "make US GAAP great again" had been a motto of US accounting well before the election) and regarding diversity (30% female Board members, on the staff more female than male members).

Technical questions that drew the most attention were the amendments to IFRS 4 regarding the application of IFRS 9 together with IFRS 4. While Parliamentarians acknowledged the positive endorsement advice EFRAG hat published in January, they noted concerns regarding the cost component (which EFRAG had not been able to assess) and also asked why the deferral approach would not be available to conglomearates. Mr Hoogervorst repeated the IASB's belief that having two different standards applied in the same company did not seem desirable and that the overlay approach would provide conglomerates with a solution to their problems.

Another topic that was approached from different angles was the frequency of amendments to IFRSs. This was discussed from the perspective of balance between stable platform and necessary maintenance and also from the perspective of post-implementation reviews. The question was whether more detailed effect analyses could help reduce the amount of necessary amendments that are identified as result of post-implementation reviews. There was also some confusion as to whether making minor improvements to a standard as a result of a post-implementation reviews meant "re-opening" of a standard.

Generally, the session suffered slightly from translation mistakes and inaccuracies as well as from other minor misunderstandings, which however were overcome by joint efforts from both sides and the offer to answer the remaining questions by email.

For more information, see the video recording of the ECON meeting. (Please note that the recording, including Mr Hoogervorst's introductory remarks, can be watched in any of the EU's official languages).

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.