International Accounting Standards
Board (IASB) chairman Hans Hoogervorst warned accounting
should not raise unreasonable expectations as it is not an exact
science.
During a his speech entitled The
imprecise world of accounting, at the International
Association for Accounting Education & Research conference in
Amsterdam, Hoogervorst called for the world to remember, when
putting pressure on the accounting profession in the wake of the
financial crisis, that accounting uses human judgement and
decisions.
Hoogervorst went on to stress that accounting
can give a concrete contribution to business adding that the
criteria when improving international standards should be realistic
over what accounting can do and what it can’t.
“I believe we should be guided by the
following three terms: principles, pragmatism and persistence,” the
IASB chairman said.
Hoogervorst also addressed the issue of other
comprehensive income (OCI) admitting the IASB should analyse the
issue closer.
“OCI can contain very important information.
It can give indications of the quality of the balance sheet. It is
very important for investors to know what gains or losses are
‘sitting’ in the balance sheet, even if they have not been
realised,” he concluded.
