* IASB: cutting disclosure overload a key priority
* Work on formal links with national rulesetters to start
By Huw Jones
LONDON, March 7 Tackling company
"disclosure overload" will be among cherry-picked projects for
accounting standards reform after industry calls to ease the
pace of change, a top accounting rule-setter said on Wednesday.
"Now we have most of the world on board, even a small change
to a standard can be like dropping a pebble into still water,"
International Accounting Standards Board Chairman (IASB) Hans
Hoogervorst said in a speech in Mexico.
"Let's fix what needs fixing, and no more. The most common
feedback is a request for a period of stability."
Over 100 countries have introduced IASB rules for use in
listed company reporting over the past decade, during which the
board also worked with its U.S. peer to align each others'
standards. The aim was to persuade the world's biggest economy
to adopt IASB rules, too.
But America has delayed its decision, recently prompting
Singapore to put back full adoption of IASB rules. Meanwhile,
the IASB is finalising work for its next phase.
Andrew Buchanan, a senior official at auditor BDO and a
member of the IASB's advisory council, said work on future rules
should only be undertaken where there is a pressing need.
"There should almost be a presumption against change unless
there is a clear case," agreed Nigel Sleigh-Johnson, head of
financial reporting at global accounting body ICAEW.
Hoogervorst said future rule changes were likely to include:
** revising the "conceptual framework" that underpins all
** tackling disclosure overload by stopping companies using
endless "boilerplate" explanations that can mask what's really
** what to do with "other comprehensive income" or OCI, a
reporting category used to highlight less than certain income
but blamed by critics for causing earnings volatility;
** possible new standard on agricultural activities.
Hoogervorst sketched out how such rule reforms would also be
handled differently in future in a bid to ease the cost and work
He sketched out a new structure for the IASB to link
formally with national accounting standards bodies so they can
share the "heavy lifting" early in researching new rules as well
as ensuring proper implementation.
This would also help to smooth out the inconsistencies in
how approved IASB rules are applied in different countries, a
criticism some in the United States have used to argue against
adopting the London-based board's rules.
"An integrated supply chain means that you are better able
to guarantee the quality of the product," Hoogervorst said.
BDO's Buchanan said such formal links would enable the IASB
to use research already being done in places like New Zealand,
France, Britain and the EU on cutting disclosures.
A joint New Zealand and Scottish "excess baggage" accounting
study last year found that company reports could be cut by a
third or more if "immaterial" disclosures that risk hiding key
information from investors were scrapped.
"It is possible that national standard setters could also
undertake some work on behalf of the IASB to 'road test' key
proposals during development," Buchanan said.
Hoogervorst's "supply chain" plan could help coax the United
States on board by ensuring it would have a formal channel to
strongly shape rulemaking if it decided to adopt IASB standards.
Monitoring and implementation of rules will also be at the
core of the IASB's next phase, Sleigh-Johnson said.
"I can't see how the IASB alone can undertake its
responsibilities without a huge increase in resources. Having
the global standard setter alone would soon get out of touch
with reality on the ground," Sleigh-Johnson said.
(Editing by Will Waterman)