IFRS improves cross-border financial communication – consistency is key
With debate around the rationale for global accounting standards continuing throughout 2014, there is still concern expressed about the use of International Financial Reporting Standards (IFRS), with some policymakers around the world preferring a less committal form of global accounting standards in which there is more room for countries to set their own standards. Yet, the use of IFRS as a common financial reporting language has markedly improved the quality of cross-border financial communication among international companies, investors, auditors and regulators. A move away from IFRS as a common financial reporting language would therefore be a step backward.
Growing adoption of IFRS continues
Over the past year, the use of IFRS has continued to increase. The International Accounting Standards Board (IASB) reported in 2014 that 114 of the 138 jurisdictions it had researched required the use of IFRS for all or most listed companies and financial institutions, while a further 12 permitted the use of IFRS in their jurisdiction. During this time, the IASB has enhanced its legitimacy as a global standard setter with its increasing commitments to public authorities, while being structured as a private sector body.
Great strides made, yet still more to do
The completion in 2014 of IFRS projects on revenue recognition and financial instruments shows that modern international accounting standard setting is a collaborative effort that involves lengthy gestation periods and extensive due process. The remaining major projects of the IASB, insurance contracts and leases, each have a similarly complex history and still require a determined effort from the IASB before they can be completed.
Source: EY – IFRS improves cross-border financial communication – consistency is key
