Remarks by IASB Chairman Hans Hoogervorst at the IFRS Foundation Conference in Melbourne
On 24 November 2011, IASB Chairman Hans Hoogervorst addressed the IFRS Foundation Conference in Melbourne, Australia. In his speech, he discussed a wide number of topics, including the adoption of IFRSs in the Asia-Pacific region, the current status of the financial instruments project, and the prospects for global adoption of accounting standards.
Mr Hoogervorst noted the adoption of IFRSs across the Asia-Oceania region, starting with countries such as Australia which adopted IFRS fr om 2005, and the establishment of Asian-Oceanian Standards Setters Group (AOSSG).
In relation to the financial instruments project, Hoogervorst gave a candid assessment of the current status, noting it is a "difficult project", lamenting that the IASB and FASB "ended up in different places" on offsetting, but also noting the good progress in areas such as hedge accounting and impairment. He also discussed the IASB's recent decision to conduct a limited review of IFRS 9Financial Instruments, noting the IASB "gradually came to the conclusion that we could make a lot of progress on both ... issues – insurance and convergence - by adapting IFRS 9 in a lim ited way".
Hoogervorst concluded his speech by providing an assessment in relation to the question of the adoption of IFRS in various countries, discussing the 'big four' of China, Japan, India, and the United States. Reflecting upon the work plan reports recently released by the United States Securities and Exchange Commission (SEC), Mr Hoogervorst made the following remarks:
The SEC staff has nearly completed its thorough and comprehensive assessment of the issues related to US adoption of IFRSs. These latest papers examine how well the standards are being applied by companies reporting using IFRSs and the remaining differences between IFRSs and US GAAP.
While this first paper concluded that the financial statements analysed generally complied with IFRSs, there were inconsistencies observed – mainly due to a lack of disclosure of accounting policies and how individual standards had been applied. Indeed, this is a common finding for regulatory reviews.
The Wall Street Journal noted the findings of this study were similar to a previous SEC study of Fortune 500 companies using US GAAP. The problem of inconsistent application exists whether companies use IFRSs or US GAAP...
The second paper, examining the differences between IFRSs and US GAAP, contains no major surprises. The paper recognises the tremendous progress that the boards have made in bringing IFRSs and US GAAP into alignment. However, the paper also shows how quite a few differences remain, particularly in the detail. Many of these differences are not very important. But getting rid of them through a process of convergence could take up many, many years.