IASB chairman Hans Hoogervorst has told the
Economic and Monetary Affairs (ECON) Committee of the European
Parliament he is confident the US will incorporate IFRSs into its
reporting framework but is unsure how.

Hoogervorst said a negative decision by the US
Securities and Exchange Commission would be a huge disappointment
after years of convergence but would not mean the end of IFRS
adoption throughout the world.

Hoogervorst discussed two other main topics:
the importance of the IASB’s relationship with Europe and his
observations on the role of accounting standards and the financial
crisis.

Hoogervorst said in many cases there has been
insufficient transparency for investors to be fully aware of the
risks they were taking.

“If volatility is indeed the new normality,
how should accounting standard-setters respond?” he said. “Should
we artificially shield investors from learning of this underlying
economic volatility or should accountants try to describe, as
accurately as possible and with full transparency, this new
normality?

“Most people I speak with believe that
financial reporting should tell it how it is, rather than how we
would like it to be.

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Hoogervorst continued: “Asking accountants to
describe economic volatility is one thing, but we should be careful
that in doing so financial information does not become the source
of economic volatility.”

The chief standard setter said it is for this
reason the IASB has been “pragmatic” about which measurement
techniques to adopt, employing a mixed measurement approach.

“Our upcoming hedge accounting rules will
prevent artificial accounting volatility to companies who hedge
their risks,” he added. “Accounting should not mask volatility, but
neither should it be the source of it.”