Chairman of International Accounting Standards Board strongly criticizes the scope of International Financial Reporting Standards
Chairman of International Accounting Standards Board has strongly criticized the scope of International Financial Reporting Standards and its interpretation in a conference which was held on 4th June at ECB Conference in Frankfurt on Accounting that is Financial Reporting and Corporate Governance for Central Banks. It was on the charter of IASB to held meetings and dialogues on current model of impairment cost for its betterment.
He strongly recommended the importance of well established impairment model for measurement of impairment cost. He was of the view that our current model for impairment measurement is not technically sound. There is a big need to re-establish this model to fulfill the current pressures of the market. There is no doubt on the opinion of Hoogervoorst. He is very keen for the restructuring of present renovated model.
It is a fact that a large number of banks are below the book value of market capitalization. That is why market consultants do not rely on the current economic conditions of the market. Counted Loss Structure is comparatively more reliable and accurate as compared to other models. It should have been used for the measurement of impairment cost in the banking sector.
Current market situation is very critical and in such circumstances it is not an easy job to do the best in the presence of intense political pressure. The current impairment model operating in the banking sector is responsible up to great extent for the baking depression. These was a need for a relevant impairment model and it should have been applied a couple of years ago. There are so many negative factors which are highly responsible for non-implementation of new impairment model. But no one can deny the importance of banking sector in the development of the country. That is why chairman of IASB is interested to held dialogues for the betterment of current impairment model.
Chairman of International Accounting Standards Board further added in his speech that both International Accounting Standards Board as well as United States Financial Accounting Standards Board (FASB) is agreed on this point that there is a very strong need for the restructuring of impairment model and its implementation immediately. Meetings between the two bodies are frequently organized and recommendations are put forward from both sides.