The oversight body of the IASB said that recommendations by the Maystadt Report to give the E.U. more say in IFRs standard setting could further lengthen what are already very lengthy procedures and incorrectly stated that the IASB is overly influenced by US GAAP. The central theme of the report is to transform the European Financial Reporting Advisory Group (EFRAG) into a vehicle for enhancing E.U. influence on international accounting standard setting. For example, the report wants EFRAG to request the IASB to have longer comment periods on consultative documents, noted the IFRS Foundation, when the IASB already has an extensive due process, which was revised earlier this year following a consultation with all global constituents.
In its statement, the IFRS Foundation said that their global constituents can meet the IASB’s comment deadlines and would not wish to see them being extended to meet a request from
Europe. Further, it would considerably
hinder the IASB’s ability to operate efficiently if it agreed to an EFRAG
request for even longer comment periods. The IASB is acutely conscious of the
fact that it takes years to develop a new IFRS and, noted the Foundation, is
looking to reduce the time taken, rather than providing further extensions and
thereby slowing down the process even more.
GAAP. The IFRS Foundation
disputed the idea that US U.S.
influence is overstated. The report’s reference to the IASB continuing to acknowledge
the major influence of FASB positions is not an accurate characterization.
During the IFRS-GAAP convergence projects with FASB, the IASB maintained its
independent voice, even when working with FASB, on issues on which it has taken
a different view that was based on the merits of the issue at stake. This is
demonstrated by the fact that there remain differences between IFRS and US
GAAP, for example in the treatments relating to the offsetting of financial
instruments and the definition of control that is the basis for consolidation.
Further, the worldwide spread of IFRSs made it more appropriate for the IASB to adopt a new strategy and to move to a multilateral engagement with FASB and other national standard-setters and regional bodies. The wording in the Maystadt Report does not acknowledge this fact. The shift to a multilateral approach is most notably demonstrated by the establishment of the Accounting Standards Advisory Forum, on which 3 of the 12 members come from the EU (plus one at large member , the UK), and 3 from the Americas (representing the US, Canada and the Group of Latin American Standard-Setters, GLASS).
Financial stability. The IFRS Foundation also rejected the idea of introducing financial stability and economic development standards into IFRS. Accounting standards should not be “instrumentalized” with a view to hiding or twisting the objective representation of the situation and the performance of businesses. While the IFRS Foundation supports the goals of financial stability and economic growth, IFRS can best make a contribution to both by providing transparency to the capital markets. The idea is based on an ongoing misunderstanding as to the purpose of general financial reporting, and about its limitations, and how it interacts with financial stability.
FCAG. The report of the Financial Crisis Advisory Group set out the real situation and how both accounting standard-setters and prudential regulators serve the public interest in accordance with their respective missions. The FCAG emphasized that financial reporting, by providing only a snapshot in time of the economic situation and performance, cannot provide perfect insight into the effects of macroeconomic developments. However, what it does do is provide as unbiased and relevant information as possible about the economic performance and condition of businesses in a way that provides confidence to investors and other capital market participants in the transparency and integrity of that information.