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.
Influence of 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.