A discussion paper based on the British Accounting Association Financial Accounting and Reporting Special Interest Group (FARSIG) Colloquium, 11 January 2013.
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 line of speakers this year reflected that with a couple of regulators, an academic, an analyst and a professional accountant. The audience at the event seems to reflect that mixture as well.
Financial reporting continues to develop in the shadow of the financial crisis. The title of this 2013 discussion “Still grappling with major problems” might seem to take up the theme of the continuing debate over how reporting should be altered for the lessons of the crisis. I think that is a fair assessment. The pace of change and agreement to change means that five years on we are still finalising the accounting changes – IFRS9 the major new standard that has been developed by the IASB in response to the crisis is still being got into final form.
Thinking ourselves back to the heat of the crisis in 2008/9 we might have expected something sooner. A major delay has been trying to agree on a common solution particularly with the US standard setter. That appears to be headed for failure on impairment of loans at least. On the other hand the response of financial reporting do not seem much behind the responses of prudential regulation, capital adequacy of banks or auditing. The slower progress must reflect also the success of the adoption of IFRS as global standards. The more countries adopt IFRS the harder changing those standards may become.
This FARSIG paper does look back to those continuing issues from the crisis that are not fully resolved in the discussion of banking crises. Equally however it is also looking forward to the new agenda for financial reporting – the conceptual framework and the integration of financial and non-financial reporting.