2013 marked the real beginning of the end of the era of the International Accounting Standards Board having arguably the most powerful national standard-setter, the Financial Accounting Standards Board, as its exclusive partner in the difficult task (or dance?) of rulemaking.
Since then, and especially over the last 12 to 18 months, IASB has been displaying--out of savvy civility and reasoned necessity?--a tad more deference toward other national rulemakers spread around the world.
I mean “deference” as used in the second definition of the word, as listed in printed and on-line dictionaries.
Not dictionary.com’s “respectful submission or yielding to the judgment, opinion, will, etc., of another” (#1), but more in line with my vintage edition of Webster’s New World dictionary’s “courteous respect” and the on-line source’s “respectful or courteous regard” (both at the #2 position).
Strong Signals in London.
Strong signals of such an institutional diplomatic attitude were seen at some big meetings in London about a month ago.
Both IASB’s Hans Hoogervorst and Michel Prada, the chairman of the trustees of IASB’s parent, the International Financial Reporting Standards Foundation, devoted a lot of time to speaking with national standard-setters that were gathered by the score for two meetings: World Standard-Setters, hosted by IASB annually, and the International Forum of Accounting Standard-Setters, a biannual gathering of an independent assemblage of rulemakers.
Continued and increased buy-in to international financial reporting standards by national and regional rulemakers and advisory panels is needed, as IASB and the IFRS Foundation realize--not only for consistent application of IFRS as they gain in adoption numbers globally, but also for the very survival of the apparatus centered on the work of the board in the City of London at 30 Cannon Street.
That is especially the case when in the biggest national capital market in the world, the U.S., the notion of the Securities and Exchange Commission embracing IFRS is said to be “politically dead.” Hoogervorst offered those words in a candid reading of the outlook for the SEC on the IASB-written standards in a brief interview Sept. 27 in London.
IASB and its leaders point to what they view as good progress on movement toward IFRS in Japan, China, and India and in regions such as the Middle East, Africa and Latin America.
“Network of Relationships.”
At the start of the day-and-a-half meeting of World Standard Setters, Hoogervorst said in part in his welcoming remarks, “We will very carefully listen to what you have to say.”
The chairman of IASB, which was formed in 2001, added later: “I think it’s fair to say that after 15 years, our relationship with the national standard-setters has more or less crystalized.” He described “a network of relationships,” and he called the WSS meeting, “our most inclusive platform for network and cooperation with national standard-setters.
“I think we will always need it,” Hoogervorst continued. “I think it is very useful because everybody comes, and we can reach you and you can reach us. It is efficient and it fulfills an important function.”
He also had a positive words for the meetings of the Accounting Standards Advisory Forum. That is the select group of the chairs and senior colleagues of key national and regional standard-setting panels who, along with Hoogervorst and company, discuss and dissect pending projects of the IASB.
Hoogervorst spoke of collective happiness in how the forum, known as ASAF, works.
“It’s really a two-way street,” he said in his Sept. 27 speech. “We really value the advice that we get from ASAF.” He added: “And I think that it works even better than many of us had anticipated.”
Hoogervorst then spoke of IASB’s relationship with the International Forum of Accounting Standard Setters – another large venue for rulemakers from around the world, but smaller than the annual gathering of World Standard-Setters (and, unlike WSS, it’s not an IASB subsidiary).
He noted the independence of IFASS. (Indeed, the forum held a session of extended discussion in London--closed to IASB members and the board’s staff--in which some forum participants spoke frankly about their frustration in not being able to get what they view as worthy standard-setting topics on the IASB agenda.)
Said Hoogervorst, in addressing the World Standard-Setters meeting and referring to IFASS: “I believe it can fulfill a very useful function in terms of communication among you, in terms of helping us get consistent application and implementation and providing us with feedback.”
Prada: Working with the U.S.--“To Avoid Divergence”
For his part, Michel Prada, chairman of the trustees of the IFRS Foundation, also spoke of great progress--and a degree of success of which IASB and its supporters should be proud--on the global standards front, including in gaining acceptance for IFRS around the world.
In a speech after a dinner for the World Standard-Setters in London, Prada cited a need for a network among IASB and national and regional standard-setting bodies.
Prada spoke of the U.S. when he said, “We have a country, which is in North America, that is at a standstill” with regard to acceptance of IFRS.
He added: “We still have to work with our U.S. friends
to see how we can manage this situation, clearly,” and “avoid divergence” between IFRS and U.S. generally accepted
accounting principles, “wherever
possible” and “favor convergence
“We Need You.”
In his post-dinner speech Sept. 28, Prada described the “huge challenge of proper implementation” of IFRS “everywhere in the world.
“We are not a big organization--150-odd people--with no legal capacity to enforce,” said the IFRS Foundation chief.
“If we want to work on proper implementation, we need you,” he said. “We need the national and regional standard-setters. We need a good relationship with the people and with you.”
Fewer U.S. Delegates?
Reflecting that need, and seeing how the situation of IFRS acceptance--the who and the where--is shaking out, the structure and organization of the IASB is changing.
The change embodies a shift toward wider representation of regions where IFRS have been or are in the process of being adopted--meaning, it seems, fewer seats at the IASB table for folks from the U.S. than in years past.
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