ACCA was pleased to host again the FARSIG annual discussion of the future of financial reporting. The meeting continues to provide a valuable discussion between interested parties – principally academics studying financial reporting and those involved with its practical application in way or another. The speakers this year reflected that with three regulators and two academics. The audience at the event seems to reflect that mixture as well.
The 2014 papers and discussion covered three main areas. Firstly, a couple of aspects of the new conceptual framework from the IASB were looked at – the users of financial information and measurement. The literature review on users indicated just how much investigation of this issue has been carried out, but also that some users have attracted more attention than others. Measurement is a more complex issue than the black and white choice between cost and fair value. We will hear more over 2015, perhaps at FARSIG and certainly more generally, on these and other aspects as the debate resumes in earnest with the publication of the exposure draft of the new framework.
The other IFRS related issue was disclosure. IASB seem to have taken on board that the length of financial statements is excessive and the disclosure overload issue. The quality and consistency of provision of existing disclosures has been looked at and to a degree found wanting. The clutter of immaterial information may not be not helpful, but there may be greater risks in terms from the omission of significant items. Again we will hear further from the IASB on this issue in future.
The third area of focus was on the upcoming changes to UK accounting from convergence with IFRS (in the guise of FRS102) and from implementing the new accounting directive from the EU. These will be implementation issues for practice over the next few years and then perhaps they will be the subject of academic studies.
We are seeing an increased impact of academic studies on the development of financial reporting. Standard setters need, quite rightly, evidence to support the development and revision of their standards. IASB published a key post-implementation review of IFRS3 on business combinations, and this is now part of their regular due process. They are hosting a regular research forum. Legislators also need to prepare impact assessments. All of these can and should benefit from the findings of academic research. The need for interaction between practice and academia, such as the FARSIG symposium, is therefore more important than ever.
ACCA extends its thanks to Mike Jones, Andrea Melis, Silvia Gaia and Simone Aresu for providing this summary of the event.