The key changes concern

• allowing greater flexibility in measuring practical experience,
• permitting supervisors or mentors to direct an aspiring professional accountant's experience, and
• requiring practical experience to be recorded in a verifiable and consistent form.

Comments on the document close on 8 October 2011. Click for IAESB press release (link to the IFAC website).

Read our resident regular columnist, Robert Bruce, for his take on what the speech means for the future, and during this time of European financial upheaval.

Click for:

• The Bruce Column — Moving to centre stage

 

Amongst the many qualities and attributes it noted was his ability to take the most senior of people down a peg or two if they started talking nonsense, the blather of politics. And it was also obvious to all of us who were present at those meetings that he didn't feel that fierce argument would fail to produce consensus. Quite the opposite in fact.

That was a few years ago now and Hoogervorst has now stepped up to the chairmanship of the IASB. But his ability to express the nub of the issue in clear, unequivocal and logical terms is unabated. The morning he took over the IASB chair he issued a statement which, in amongst many positive things, referred back to his time as Dutch Minister of Finance and as Chairman of the Dutch securities and market regulator. This is what he said: 'It was during this time that I developed a strong belief in the importance of transparency and openness in financial reporting. Indeed, during the crisis I spoke out in favour of maintaining the highest levels of transparency in financial reporting, much to the annoyance of those, (and there were many), who believed at the time that the accounting could be neutered in order to "protect" investors and the markets from being spooked'.

So it should have come as no surprise during his first public speech as IASB Chairman in Zurich in the same week, to find him making the same point. The accounting during the crisis may not have been perfect but using accountants as scapegoats for failures in the system was just not on. He constantly emphasised that the fatal flaws had been in economic standards rather than accounting standards, such as gaming the Basel capital ratios.

He talked of the priorities: revenue recognition, lease accounting, and financial instruments. All familiar sticking points in recent months but he engaged them with vigour. He signalled the publication of a consultation paper to look at what should be on the post-convergence agenda up ahead. And he underlined the way that future projects would be chosen: what was urgently required and what would be the best use of the IASB's resources.

And he treated the vexed issue of the US decision to go for IFRS or not with skill, charm and understanding. But he thought in the end it would be hard for the US, a member of the G20 nations which have repeatedly signed up to the idea of one global accounting language, not to do so. If a global language is to come about it is pretty well bound to be IFRS and if the US wants to remain a leader in international financial reporting then it would be hard to understand why they might want to go it alone. IFRS, he pointed out, had already linked the rising economic giants of the East with the longer established economies of the West. IFRS was all about economic growth and globalisation.

This was good persuasive stuff. And it was expressed with force and a smile. The Hoogervorst method, so familiar from the FCAG experience, was there: Explain the logic and leave no wriggle-room for those who propose a different, and lesser, answer.

Then, in answering a question, he took his style to a different level. He had touched upon the problem of impairment and the pressing issue of Greek government bonds during his speech. But in the questions afterwards the topic was opened up again. And it became clear that he felt that it was time for the EU to endorse IFRS 9, which has languished in the in-tray for a couple of years now. And the reason he was suggesting this should be done was not so that they could continue some tit-for-tat squabble over the technical issues involved. It was because, as he elaborated, it would be of enormous use in easing problems over Greek debt.

With that one single suggestion he elevated the debate to another plane and showed where the accounting high ground of the future would be situated. It was not going to be in the field of arcane technical matters, which only the technocrats would comprehend and then argue over them for months and years. The Hoogervorst future is at the heart of the widest economic and business issues. The global stature of the IASB will be reinforced further and take its place at the table where it will become even more obvious that financial reporting is at the heart of economic progress.

Robert Bruce
July 2011

Related links

• The IAS Plus Interviews — Hans Hoogervorst, New IASB Chairman (July 2011)
• The Bruce Column — Hans Hoogervorst and Ian Mackintosh: Some insights into their thinking (October 2010)
• Profile of Hans Hoogervorst
• Our financial instruments page
• Our global financial crisis page

 

 

The meeting will be open to public observation and will be webcast. An agenda for the meeting has not yet been announced.

The IASB formed the FIWG in September 2004 to examine and question the fundamentals of IAS 39 within the context of the IASB's Framework, with the goal of "improving, simplifying, and ultimately replacing IAS 39" but it has not met since the beginning of December 2009 which is shortly after IFRS 9 was first published. That means the members of the FIWG only met to discuss phase I of the IASB's project for replacing IAS 39 (classification and measurement of financial assets), however, there has been no working group meeting so far during the phases II to IV.

Please click for FIWG Meeting Info on the IASB's Website.

• Elke König (IASB member) and David Humphreys (IASB staff) presented an update on the IASB's Leases project. To view the presentation click here (PDF 646k, link to IASB website).
• Steve Cooper (IASB member) and April Pitman (Technical Manager) presented an update on the IASB's project on Revenue Recognition in Contracts with Customers. To view the presentation click here (PDF 777k, link to IASB website).

The New Zealand Accounting Standards Review Board (ASRB) has been replaced by the External Reporting Board (XRB). The change became effective 1 July 2011.

The new XRB Board held its first meeting on 1 July 2011 to consider some governance matters and to approve a number of standards for issue. The XRB has also started producing a new communiqué. The first issue is available here (link to XRB website); it contains a summary of all decisions arrived at during the first XBR board meeting.

Furthermore, a new XRB website has been developed and is now live at www.xrb.govt.nz. The website has specific pages where accounting standards, and auditing and assurance standards, are available. The XRB will not be publishing hard copies of standards.

In his speech entitled International Auditing and Assurance Standards: Implementation Challenges and Success Factors Schilder showed that during the last year alone the number of jurisdictions that already are using the ISAs or have committed to using them in the near future has more than doubled – a year ago, there were approximately 30 countries; today, there are more than 70. The transcript of his speech (link to IFAC website) contains a reproduction of a slide showing which countries already apply ISAs or will do so in the near future.

 

The investor panelists discussion supported a single set of globally accepted accounting standards. However, the investor panelists were concerned about the IASB's governance and funding, especially regarding the fact that financial reporting may be serving public policy interests rather than those of investors in some countries. Further concerns were raised on the uniform application of principles-based accounting standards and the IASB's interpretative mechanisms. Investors stressed the importance of the IASB's having a responsive interpretative mechanism subject to a formal standard-setting process, and they noted that local interpretation of IFRSs could lead to diverse application of IFRSs globally.

The smaller public companies panelists were concern about the lack of resources and the potential implementation costs. Some panelists viewed little or no benefits of implementing IFRSs. The panelists mostly supported a "big bang approach" versus a staggered approach for incorporating IFRSs into the U.S. system. A staggered transition was perceived as more costly. They also stressed the importance of the FASB and IASB completing its current convergence projects before the SEC sets the date for IFRS incorporation.

The regulatory panelists discussed the current use of U.S. GAAP financial information in the various regulatory activities they undertake, the steps required and potential timing to make changes in regulations, and costs and benefits of potential IFRS incorporation. The panelists believe that sufficient time should be provided for the transition to IFRS and that the needs of U.S. investors should be carefully considered.

Click for:

• Deloitte Accounting Journal — SEC Holds Roundtable Discussions on IFRSs (PDF 30k)
• Investors Defend FASB Role on IFRS (link to CFO.com website)

 

The session on Replacement of IAS 39 for Wednesday, 20 July 2011 has been moved to Friday, 22 July 2011.

A revised summary of the agenda for the meeting can be found here.

The report can be downloaded from the IASB's website.