That label covers everything from the format of financial statements to how best to use technology (and what to avoid). Hoogervorst’s view is that, now that the standards are written and agreed, the board must focus on improving how they are understood and applied.
Take materiality, an area where Hoogervorst admits more clarity would be useful. “Materiality is part of the Better Communication program,” he says, “because we believe that a lot of disclosures are being made using checklists that satisfy auditors and regulators, but not necessarily investors or companies themselves.
“So we have set out to clarify the materiality concept and how to use it. By adjusting IAS 1 (the standard that sets out the guidelines for presenting financial statements), we have made it much clearer that if something is not material, not only do you not need to include it in the financial statement – it is actually better not to do so.”
The IASB is also working on a materiality “practice statement” to make it easier for preparers to avoid clutter, streamline their financial statements and enhance the effectiveness of their disclosures. “That’s beneficial both for preparers and for investors,” Hoogervorst notes, adding that work to simplify and streamline financial statements will continue as part of Better Communication.