Adjusting to change
Sue Lloyd, Vice Chair of the International Accounting Standards Board (IASB), echoed Baroness Lane-Fox’s observation that, now more than ever, business must be seen to be putting its house in order.
Lloyd was present to outline the IASB’s determination to focus on working as a partner with business. “We are adjusting our work to adapt to the changing financial reporting environment, and to the feedback from companies,” she said. “They want a period of calm, and they want us to stop generating new standards and focus on providing support for the standards we already have.”
To that end, she made it clear that regulators and business must work together to make certain that standards meet the needs of both preparers and users of accounts. “A number of things that we’re working on are taking us beyond our traditional debits and credits,” she said, citing the efforts to look at non-GAAP measures and to bring some of them into the audit process. As part of that, the IASB is considering requiring all companies to provide a note to the financial statements outlining what measures of performance the company uses to communicate with investors.
While the Board would prefer to see an IFRS-related measure, she said alternatives would be accepted, as they can provide a deeper understanding of the company. Once again, it’s ultimately a question of finding ways for businesses to explain what they are doing and why, to regain the trust of stakeholders.