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Will the accounting standards be a victim of the digital transition?

Like any language adapts and evolve over time, accounting standards, a language in its own, is currently facing tremendous challenges with new types of transactions emerging out of new technologies and the corporate reporting landscape broadening towards non-financial disclosures. 

The International standards setters and its USA and Canadian counter parts discussed these issues with this magazine in a long phone interview in November. The three standards setters met at the IFRS Conference: Americas in Toronto and on this occasion spoke to The Accountant.

After tackling questions around US GAAP and IFRS convergence as well as IAESB board reprensation issues, the three standards were asked about the evolving nature of corporate reporting and the rise of non-financial disclosure.

Accounting Standards Board (ACSB) chair Linda Mezon said: “Certainly I agree that, if you’re going to keep financial statements relevant, you need to make sure you understand what people are looking for from them […]As a standard setter, I’m very much focused on financial reporting with the wider lens that goes beyond the pure statements and the accounting standards that drive those statements. We need to decide how to get that to coexist with what we’ve traditionally done, and that’s going to be a big discussion over the next few years.”

Internatioanl Accounting Standards Board (IASB) chairman Hans Hoogervorst said that while there is some overlap between sustainability reporting and financial reporting, the IASB  is also determined to keep on focusing on the financial reporting, which will always remain extremely relevant to the investors.

Similarly Financial Accounting Standards Board (FASB) chairman Russel Golden said that FASB has focused its mission on reporting the accounting and it’s not going beyond that. “We do monitor and we are interested in what others are doing beyond the financial accounting to understand why they’re doing it and how investors are using it,” he added.

Technology is another topic on the standards setters mind as historically accounting standards were made for human consumptions, but increasingly they have to be developed digital consumption the three standards setters said.

“For both boards, the time of the big standard setting is over for the time being,” Hoogervorst concluded. “We have filled the biggest gaps and the biggest problems in our standards and we are now both concentrating rather on presentation issues, communication value of the financial statements, rather than the substance of the financial statements.”

The full interview is accessible here

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