Concerns about the Eurozone crisis and the number of new IFRS
and IAS standards expected for 2013 opened Ernst & Young’s
(E&Y) Financial reporting outlook conference this

A survey conducted throughout the event asked
attendees a number of questions related to financial reporting
including whether IFRS have helped to improve financial reporting.
Of the 600 people there half agreed this was the case while about
three out of ten said it would be better to “bring back the old

At the same time seven out of ten of
respondents pressed the ‘yes’ button when asked if the
International Accounting Standards Board (IASB) should ensure
rigorous application of IFRS across the globe.

IASB board member Stephen Cooper said that a
number of new standards, namely IFRS 10 to 13 had been issued and
the standard setter thinks they “will improve reporting for
investments in other entities and create more consistency in the
measurement of fair value”.

Cooper pointed out that the crisis was
“largely a regulator failure” but is confident they are on the
right track for improving financial reporting, a feeling shared by
E&Y global financial instruments working group co-chairman Tony

Cooper stressed while it hasn’t been a perfect
collaborative project with the US Financial Accounting Standards
Board to converge IFRS and US GAAP due to a number of challenges,
such as completing the four remaining major projects on leasing,
revenue recognition, insurance and financial instruments the two
have still made significant progress in the past year.

Challenged by almost half of the attendees who
said the IASB’s priority should be to take a step back and reassess
the usefulness of the work that has been done, Cooper said it is
“unrealistic” as the goal “is to achieve a single set of global
standards and convergence with US GAAP is an important part of

Accounting the problem or the

The core question of the debate – whether
accounting is the problem or the panacea – was then put down by
J.P. Morgan head of European pensions, valuation and accounting
research Peter Elwin.

“I believe that good financial reporting is an
important part of the solution and is essential for maintaining
market confidence,” the analyst said.

Tony Clifford added that the real issue is how
to deal with risk-conditions changes, that are, by definition,
something nobody foresees.

The length of financial reports was also
discussed, with Better Capital chairman Jon Moulton stating there
are “too long and nobody reads them” resulting in distracting from
the really useful information.

“I don’t accept that financial reports are
‘too long’ and ‘not useful’, but I do believe that a
principles-based disclosure framework would help to avoid clutter,”
Elwin said.

The conference wide discussion also covered
the Eurozone crisis with 70% of the attendees convinced the
Eurozone will survive, but with fewer members.

“We do need in Europe better coordination
without forgetting that we are working with global markets,”
Financial Reporting Council chief executive Stephen Haddrill said,
stressing that “we have moved from confidence in the proposition of
independence [of regulators] to the belief that it’s a political
challenge to face”.