Monday, January 16, 2012

New IASB Oversight Chair, a Former Securities Regulator, Is Fully Committed to Global Adoption of IFRS

The new Chair of the IFRS Foundation, the overseer of the International Accounting Standards Board, is strongly committed to the adoption of IFRS as the set of global accounting standards. Michel Prada said that IFRSs have become the internationally accepted standards for high quality financial reporting. They are recognized by most major economies, starting with the EU in 2005, and have contributed hugely to the transparency and comparability of financial information for listed companies.

The ongoing financial crisis should not slow down the collective effort towards global accounting standards, he emphasized, but rather the recent market turmoil shows how important it is to deliver sound, transparent and consistent information to market participants in order for them to make informed decisions. Uncertainty and ambiguity are fundamentally detrimental to efficient markets and to sound risk management, he noted, which can trigger irrational and herd-like behaviors.

Chairman Prada is fully committed to the collective effort of promoting the goal of the global adoption of IFRSs as issued by the IASB, including the process of convergence, which he described as a tool for dealing with transition towards full adoption rather than being an end point in itself. This is of the essence when considering the relationship between the IASB and the US-based FASB, he noted. While appreciating the challenges faced by the largest economy in the world when considering the possibility of fully endorsing the global standards in a strategic domain, he said that significant progress has already been achieved in that direction and work continues.

A former securities regulator, Mr. Prada was Chairman of the Autorité des Marchés Financiers, the French markets and securities regulator, where he was an outspoken advocate for investor protection and global standards. He also served as Chairman of the Executive and Technical Committees of IOSCO and was a founding member of the Financial Stability Forum (now the Financial Stability Board). More recently, Mr Prada was a member of the Financial Crisis Advisory Group, formed to advise the IASB and FASB on their response to the financial crisis. And most recently he served as Chairman of the International Valuation Standards Council, which has established excellent working relations with the IASB in the field of valuation of all sorts of assets.