Accounting Standards Board (AcSB) calls for increased comparability in global financial reporting

Let’s narrow the differences! Canada has adopted IFRS and it’s going really well. Now, the AcSB sees the future of standard-setting as a global endeavour.

The AcSB, along with many publicly-accountable enterprises in Canada, has seen the benefits from providing more comparable financial information with companies in other jurisdictions who have also adopted IFRS. In fact, the cost of raising capital is lower as a result of Canada’s adoption of IFRS, given that investors can readily compare Canadian entities to those from other jurisdictions.

WHAT ABOUT THE COUNTRIES WHO DON’T USE IFRS?

There are several significant jurisdictions still out there who have not adopted IFRS. So how are we going to see any comparability between financial reporting globally if we’re not using the same accounting framework?

We think that standard-setters around the world can work to reduce differences between frameworks. This is the key to enhancing comparability of financial reporting outcomes in the global marketplace. And we mean this regardless of which accounting framework is used — whether it’s IFRS, U.S. GAAP or another framework.

HOW ARE WE GOING TO REDUCE THE DIFFERENCES?

We are looking to the oversight bodies to encourage their respective standard-setters around the world to guide their jurisdictions toward globally comparable financial reporting outcomes. This approach would mean focusing on narrowing differences between frameworks. And, by working closely together, more jurisdictions just may end up using one global set of standards.

IFRS FOUNDATION’S “TRUSTEES’ REVIEW OF STRUCTURE AND EFFECTIVENESS”

Our views on narrowing differences in accounting frameworks worldwide are outlined in our response to a Request for Views issued in November 2015 by the IFRS Foundation in “Trustees’ Review of Structure and Effectiveness.”

The Trustees are responsible for the governance and oversight of the International Accounting Standards Board (IASB). The trustees review the structure and effectiveness of the organization every five years in order to enhance the governance, accountability and operational efficiency of the IFRS Foundation and IASB.

In our response, we get down to brass tacks. While we are happy and encouraged to see ongoing increases in the number of jurisdictions applying IFRS, more than 50 per cent of the world’s capital markets have either not yet adopted IFRS or don’t require an unreserved statement of compliance with IFRS — and it appears that full adoption is not imminent.

INTERMEDIATE GOAL

We think there’s a way to get to a common reporting outcome by taking an intermediate step — working toward getting comparable results despite the framework used. “[We] encourage the Foundation to consider that the path to achieving its primary strategic goal of developing ‘a single set of high quality, understandable, enforceable and globally accepted financial reporting standards’ is through participating in the development of accounting standards that produce comparable results in global capital markets, regardless of the framework…”

Read what the AcSB said to the IFRS Foundation.

Let us know how you think comparable financial information worldwide can be achieved by emailing us or tweet us @FRASCanada.

About the Author

Linda Mezon, FCPA, FCA, CPA (MI)

Chair, Accounting Standards Board

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