International Accounting Standards Board (IASB) chairperson Andreas Barckow delivered an address at the EFRAG Conference, highlighting the importance of International Financial Reporting Standards (IFRS) in fostering transparency, trust, and competitiveness in global financial markets.
A key focus of his speech was the introduction of IFRS 18, which aims to enhance the consistency and clarity of financial reporting, especially in the context of evolving economic realities.
Barckow opened his address by reflecting on the transformative role that IFRS has played over the last two decades in connecting global markets through a common financial language.
“Twenty years ago, the widespread adoption of IFRS Accounting Standards ushered in a new era of transparency in corporate reporting,” Barckow said, pointing to the critical steps taken by Europe and other early adopters such as Australia and South Africa.
Currently, nearly 150 jurisdictions require the use of IFRS for publicly listed companies, underscoring the widespread belief in the value of these standards for promoting competitive and transparent markets.
Despite this global adoption, Barckow emphasised that transparency alone does not automatically translate into competitiveness.
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By GlobalDataRather, he stressed that transparency is a foundational element that enables businesses to effectively compete on the global stage. By providing a consistent and reliable framework for financial reporting, IFRS helps investors make informed decisions that drive economic stability.
A key point of Barckow’s speech focused on the balance the IASB must strike between ensuring transparency and adapting to the unique economic realities of different jurisdictions.
“Our global reach means we need to be cognizant of the diverse stakeholder needs in economies with vastly different conditions,” he explained. “While our mission to help investors make good capital allocation decisions receives universal endorsement, the practical reality can look very different depending on where you are from.”
This acknowledgment of diversity in global economic contexts is central to the IASB’s decision-making process.
Barckow highlighted the ongoing project on intangibles as an example of how the IASB navigates diverse perspectives to craft standards that are both practical and robust.
In addition to transparency, Barckow also addressed the relevance of traditional financial reporting in an increasingly complex business world.
He asserted that traditional financial statements remain essential for understanding a company’s financial position and resilience.
However, he acknowledged that in today’s interconnected world, financial statements need to be complemented by other forms of reporting, such as sustainability disclosures, to provide a more comprehensive view of a company’s performance and prospects.
“Financial statements are designed to capture the present and document the past, not predict the future,” Barckow said. “But when connected effectively to other forms of reporting, such as sustainability data, they can offer a more holistic picture of a company’s activities.”
This evolving perspective on financial reporting reflects the broader shift toward integrating environmental, social, and governance (ESG) factors into decision-making processes.
While Barckow stressed the importance of transparency, he also cautioned against overloading financial reports with excessive complexity.
The path forward, he argued, lies in understanding how different types of reporting can complement each other, rather than attempting to choose between them.
In conclusion, Barckow reaffirmed the IASB’s commitment to advancing financial reporting standards that are both transparent and adaptable to the ever-changing global landscape.
“Our success in advancing global financial reporting standards has always been built on shared understanding and common purpose,” he said. “By staying true to our mission but also evolving to meet new demands, we can ensure that financial reporting continues to build trust and support global markets.”
In October 2024, Accounting Standards Board of Canada chair Armand Capisciolto stressed the impact of IFRS 18 on financial reporting to CPA Canada.
