Digital Acceleration for IFRS
Sixty percent of financial statement data is already being consumed electronically, and this figure will continue to grow, according to International Accounting Standards Board Chairman, Hans Hoogervorst.
Speaking at an Accountancy Europe conference on the Future of Corporate Reporting on Monday, Mr Hoogervorst emphasised the need for the IFRS standards setter to take a fresh look at the Primary Financial Statements. The standards setter is looking to incorporate more break downs, examine the need for more sub totals, and provide better structure to the income and cash flow statements. These measures will allow users to reduce their reliance on notes to the accounts. All of these changes, carried out as part of the Better Communications initiative will also help further improve the IFRS taxonomy. Indeed, “improving the accessibility and quality of digital financial information by continuing to develop the IFRS Taxonomy and build upon its use around the world” is one of three key initiatives of the IFRS Foundation mentioned by the Chairman.
Mr Hoogervorst pointed out that the upcoming application of the IFRS taxonomy in the SEC’s Foreign Private Issuer XBRL mandate and ESMA’s ESEF reporting requirements across Europe, will improve the data available to users, including through data providers. It will also provide the IASB itself with a rich source of information about the way that companies are disclosing financial performance around the world.
At the same time, financial reporting in the narrow sense has limitations, according to the IASB Chair, who emphasises the need for users to have access to a range of other information as well. While acknowledging the importance of Environmental, Social and Governance reporting, the IASB is not, at this point, looking to take on standards setting in this wider field of Corporate Reporting, acknowledging that this expertise lies elsewhere, including at GRI, CDP and SASB.
In this regard, Mr Hoogerverst urged policymakers to consider the importance of changing behaviours (particularly in relation to climate change and environmental degradation) through targeted use of taxation policies to alter incentives and price in risks appropriately, rather than expecting that disclosure can act as a cure all.
The IASB will continue to focus on financial reporting, with Hoogerverst underlining the importance of this role, stating that “the more information that becomes available, the more need there is for comparability, standardisation and quality control – and accounting standards aim to achieve this, based on sound economic principles”.
Read the full speech here.