IFAC President urges comprehensible financial reporting standards

SPEECH: Reading through 250 pages of detailed financial reporting standards, especially to those in the SME sector can be mind-boggling, difficult and incomprehensible, not to mention time consuming and tedious. International Financial Reporting Standards therefore should be simplified, International Federation of Accountants (IFAC) President Fermin del Valle said.

Visiting Sri Lanka at the invitation extended by South Asian Federation of Accountants (SAFA) de Valle participated in a series of events organised by the four premier accounting bodies in Sri Lanka, AAT Sri Lanka, ACCA Sri Lanka, CIMA Sri Lanka Division and the Institute of Chartered Accountants of Sri Lanka.

He was the keynote speaker at a CEOs' Breakfast and a Technical Forum themed on Evolution in Reporting for Economic Development.

Speaking on the applicability of accounting and auditing standards for SMEs, del Valle said that on January 19 the International Auditing Standards and Assurance Board which is the standard setting body designated by and operating under the auspices of IFAC, will issue the Exposure Draft on IFRS for SMEs.

"We do understand that SMEs have distinct needs and may require a separate analysis of accounting and auditing standards. These standards for SMEs are for entities that have to provide general purpose financial statements.

Our ultimate goal is to bring all standards under one umbrella so that SMEs or large corporates will have a universal reporting standardisation that is comprehensive but at the same time comprehensible."

Del Valle said while the focus will be on standards for general purpose financial statements, a sustainable system of audit regulation and facilitating the application of auditing and quality assurance standards for SMEs is also being pursued.

CEO of IFAC Ian Ball who spoke on the importance of governance and reporting in the public sector commented that very few countries have actually ventured into producing fully fledged financial reports.

Urging governments to be more aware of the importance of adhering to standards and producing financial statements, he said that the USA and UK are both conforming to guidelines and producing financial reports.

"Transparent and accountable financial reporting and governance standards ultimately reflect on the extent of economic development and governments are responsible for a country's progress or lack of progress.

Australia, New Zealand and Canada are also adopting reporting and governance standards.