Friday, November 14, 2008

IASB Trustees write to G20 representatives

The G20 representatives meet to discuss the credit crisis tomorrow. The Trustees of the IASC Foundation have written an interesting letter to the representatives of the G20 about the role the IASB has taken in the crisis and the responses made.

The letter discusses fair value accounting (mark to market) and the need to consider the views of the international community and the need to avoid quick fixes. It urges the G20 to take international opinion on the issue into account. The following quote from the letter is of interest:

The International Corporate Governance Network (ICGN), an association of 500 investment organisations in more than 40 countries world-wide with more than US$15 trillion under management, this week stated, “Investors generally support fair value that delivers a picture of what is actually happening. There are some challenges to address, but abandoning this approach would damage confidence in financial reporting.” In a survey of its European members, the CFA Institute, an international association of investment analysts, found that 85 per cent think that a suspension of fair value standards would further decrease confidence in the European banking system (559 respondents).

In another development it has been reported on the Internet that Mexico will adopt IFRS effective 2012. This was reported in the blog Crisis Talk. A quick search of the IASB site did not reveal any report of this event. Stay tuned.(Update: please see the comment on this post from Bruce Pounder)

3 comments:

The IFRS Exorcist © said...

I meant to mention that Crisis Talk has great credentials it is written by representatives of the World Bank (their own opinions)

Bruce Pounder, MBA, CMA, CFM, DipIFR (ACCA) said...

Regarding Mexico's announcement of IFRS adoption by listed companies, here is a link to CINIF's press release: http://www.cinif.org.mx/imagenes/archivos_actividades/ComunicadoPrensaCINIF_nov08.pdf

Because the release is in Spanish, I have translated it below. Note that the CINIF is Mexico's standards setter, comparable to the Canadian Accounting Standards Board or the U.S. Financial Accounting Standards Board. Also, the CNBV is roughly comparable to national/provincial securities regulators such as the Ontario Securities Commission or the U.S. Securities and Exchange Commission.

PRESS BULLETIN

Mexico City, November 11, 2008

Reports on:
• The involvement of CINIF along with the CNBV in the process of adopting International Financial Reporting Standards (IFRS) for securities issuers, and
• The activities of CINIF related to the development of financial reporting standards in convergence with IFRS for Mexican entities in general.

It is a fact that for several years, banks around the world operate in increasingly globalized markets, which implies that there is a greater flow of foreign investment to Mexico and from our country abroad. For those entities that receive investment and financing, their financial information must be reliable, relevant, understandable and comparable, not only in Mexico but in the rest of the world.

The International Accounting Standards Board (IASB) is the agency that aims to deliver International Financial Reporting Standards (IFRS), which are a set of rules applicable mainly to the financial statements of entities that come to the capital markets in the international arena. Being global criteria, IFRS in certain cases do not consider the local problems of each country

The Mexican Consejo para la Investigación y Desarrollo de Normas de Información Financiera (CINIF, in English "Council for Research and Development of Financial Reporting Standards") is the agency responsible for issuing accounting standards applicable to entities in Mexico. To date, the CINIF is an important step in the process of convergence which has helped to significantly reduce differences with IFRS; the objective is to ensure that from the year 2012, Mexican authorities have a set of financial reporting standards in convergence with IFRS, with the advantages of considering the economic characteristics and laws of our country and being prepared in Spanish.

The Comisión Nacional Bancaria y de Valores (CNBV, in English "National Banking and Securities Commission"), the governmental body that has the mission of safeguarding the stability of the Mexican financial system and promote its efficiency and inclusive development for the benefit of society, along with the CINIF announced that from 2012 onwards, entities listed on the Bolsa Mexicana de Valores (BMV, in English "Mexican Stock Exchange") will be required to use full IFRS in issuing their financial statements, allowing early adoption for fiscal years 2008, 2009, 2010 and 2011.

Within this new phase of the process of adoption of IFRS for securities issuers, CINIF will continue to work on the convergence of IFRS applicable to the rest of Mexican companies in general; in this way, it is believed that from 2012 onwards, after reaching convergence with IFRS, the financial statements of Mexican entities will be comparable in Mexico and elsewhere in the world.

Additionally, the CINIF will focus its activities on:
• participating in the analysis of new IFRS that are issued to assist in their implementation in Mexico;
• issuing interpretations of IFRS as a result of legal and economic situations emerging in our country that require acknowledgement in the financial statements of entities;
• developing guidelines for the application of IFRS;
• continuing the process of convergence of accounting standards among various economic sectors in our country, for example, participating in the development of government regulations.

The CINIF believes that the issuance of objective and generally accepted financial reporting standards will help entities' financial information be useful; therefore, it reaffirms its commitment to continue working for the benefit of Mexican society.

The IFRS Exorcist © said...

Thanks Bruce I posted an acknowledgement today.