Tuesday, July 03, 2012

IASB Chair Seeks Closer Relationship with Securities Regulators

The IASB seeks closer cooperation with securities regulators in the effort to ensure that IFRS are consistently enforced globally. In remarks before the Federacion Argentina de Consejos Profesionales de Ciencias Economicas, IASB Chair Hans Hoogervorst cautioned that the goal of having global accounting standards will be an illusion if such standards are not consistently enforced globally. The IASB is not a securities regulator, said the Chair, and does not have the resources or knowledge to monitor overall adherence to accounting standards. For that reason, the Board has begun discussions with the International Organization of Securities Commissions (IOSCO) to deepen cooperation in the future.

A more structured and deeper cooperation between the IASB and securities regulatory commissions will be beneficial to both parties. Securities regulators can provide the Board with information on possible weaknesses of IFRS standards and difficulties in enforcement, noted the Chair, while the IASB can give securities regulators insight into the meaning of the standards, which should them achieve compliance.

More broadly, he said that the Board plans to have a more structured dialogue with the community of standard setters and regulators. The issue of standards has long been a collaborative exercise, he noted, and the quality and robustness of the standards is an important step for many organizations and individuals who contribute to the Board’s work. The best example is the interaction between the IASB and the global community of standard setters.

This interaction occurs in different ways. In the last decade, the Board has worked on a bilateral basis with the FASB and other national standard setters. At the same time, there has been the emergence of regional organizations with an interest in the issue of standards, such as the European Financial Reporting Advisory Group (EFRAG). These national and regional bodies can contribute much to the IASB standard-setting. As the use of IFRS grows, so does the importance of working together to ensure that they are given due consideration to the views of all parts of the world.

The Board needs to establish a more structured and formal relationships with the community of global standard-setters and connect with these organizations at the beginning of the standard-setting process in order integrate a global perspective into the process. The Chair reasoned that the dialogue between the IASB and national or regional standard setting bodies will only make sense if the number of people sitting at the discussion table is not too large. Thus, the Board will have the challenging task of building a dialogue that is both compact and inclusive.  He is confident that the Board will meet this challenge.