IFRS and the Financial Crisis: The end of a chapter

Transcription

1 IFRS and the Financial Crisis: The end of a chapter Amaro Gomes Board Member International Accounting Standards Board (IASB) The views expressed in this presentation are those of the presenter, not necessarily those of the IFRS Foundation or the IASB 2014 IFRS Foundation. 30 Cannon Street London EC4M 6XH UK. International Financial Reporting Standards Benefits of IFRS IFRS around the world The financial crisis and the IASB IFRS and the financial crisis: the end of a chapter Conclusion 1

2 Benefits capital markets 3 credibility of local market to foreign investors; greater cross-border investment; efficient capital allocation; comparability across political boundaries; and facilitates global education and training. and companies 4 lower cost of capital; integrated IT systems; easier consolidation; one set of books ; assist in raising capital overseas; understand financial statements of overseas suppliers, customers, subsidiaries. 2

3 IFRS around the world Status of IFRS use around the world countries require or permit the use of IFRS Remaining major economies (China, India, Japan, USA) are working to converge with or adopt IFRS in the future China: standards aligned with IFRS Japan: voluntary IFRS adoption permitted since 2010 USA: convergence MoU with IASB (Fair Value, Rev Reg) Recent wave of adopters includes Argentina, Brazil, Canada, Mexico, South Korea 2010 IFRS Foundation. 30 Cannon Street London EC4M 6XH UK

4 The financial crisis and the IASB G20 Summit 25 September Redouble efforts to: achieve a single set of high quality, global accounting standards within the context of their independent standard setting process complete convergence project by June IASB s institutional framework should further enhance the involvement of various stakeholders. G20 acknowledge that there could be differences between capital requirements and accounting rules: to ensure comparability, the details of the leverage ratio will be harmonized internationally, fully adjusting for differences in accounting. 4

5 IFRS and the financial crisis: The major projects 9 Crisis related projects Financial instruments: revision of IAS 39 Fair value measurement: consolidate literature Consolidation: revision of IAS 27 Derecognition: assess application of IAS 39 requirements IFRS and the financial crisis: Improved and additional outreach activities 10 Enhanced investor engagement (among others dedicated Investor Relations Manager) Enhanced outreach practices (project specific alerts, pod casts of Board meetings, Feedback statements...) Enhanced technical dialogue with prudential supervisors and market regulators in line with G20 recommendations: proposals take account of guiding principles of Basel Committee and Financial Crisis Advisory Group report regular meetings with the Basel Committee member of the Financial Stability Board regular meetings with EFRAG national standard-setters are partners in our work participation in regional meetings of national standard-setters 5

6 IFRS and the financial crisis: the end of a chapter The end of a chapter: Financial crisis major Projects 12 Project Derecognition and offsetting Standard issued Amended IFRS 7 (disclosure) Completion December 2011 Improved disclosure requirements similar to US GAAP Consolidation IFRS May 2011 Replacement of IAS 27 Disclosures about unconsolidated SPEs/structured entities Investment companies 6

7 The end of a chapter: Financial crisis major projects 13 Project Standard issued Completion Fair Value Measurement IFRS 13 May 2011 Converged definition of fair value and common implementation guidance (including for illiquid markets) The end of a chapter: Financial crisis major projects Financial Instruments 14 Project Objective Completion Financial instruments Issuance of comprehensive improvements that foster international comparability of financial instruments Responding to stakeholder concerns (BCBS and FSB and others) to address differences between IFRSs and US GAAP Phase 1: Classification and Measurement - IFRS 9 issued in November 2009 (assets) and October 2010 (liabilities) Phase 2: Impairment to be issued until June 2014 Phase 3: Hedge issued in November 2013 Full completion:

8 Conclusion IFRS and the financial crisis: the end of a chapter 16 IASB work on financial instruments is done: improved transparency and timeliness of impairment allowances (expected model) IFRS applied properly = fewer surprises clearer risks an entity is exposed to; changes in credit expectations reflected in loan loss provisions. More efficient allocation of capital. Help avoid the next crisis? Remains to be seen 8

9 Questions or comments? 17 Expressions of individual views by members of the IASB and its staff are encouraged. The views expressed in this presentation are those of the presenter. Official positions of the IASB on accounting matters are determined only after extensive due process and deliberation. 9