Today I take over responsibility as Chairman of the International Accounting Standards Board (IASB) from Sir David Tweedie. David
has been one of the well-known figures, if not the most well-known,
in international accounting, having served for ten years as Chairman
of the United Kingdom Accounting Standards Board (ASB) and,
for the last ten years, leading the charge for high quality international
A substantial legacy
Under David’s watch, we have moved from a plethora of national and regional accounting standards to a position where companies in more than 100 countries use IFRSs. A truly remarkable achievement in just ten years, and a substantial amount of the credit must go to David for his vision and leadership. If ever there was a champion for transparency in financial reporting, it is David. We all wish him well with his retirement; although as the incoming President of the Institute of Chartered Accountants of Scotland (ICAS, his home institute), I fear that we have not heard the last from him!
A passion for transparency and investor protection
While I, as a non-technician, may not seem to have been an obvious choice as a successor to David Tweedie, I have been involved in financial reporting matters for quite some time. I served as a Dutch Minister of Finance and as Chairman of the Authority for the Financial Markets (AFM), the Dutch securities and market regulator. It was during this time that I developed a strong belief in the importance of transparency and openness in financial reporting. Indeed, during the crisis I spoke out in favour of maintaining the highest levels of transparency in financial reporting, much to the annoyance of those (and there were many) who believed at the time that the accounting should be neutered in order to ‘protect’ investors and the markets from being spooked.
Perhaps that is why in November 2008 the IASB and the FASB invited me to co-chair the Financial Crisis Advisory Group (FCAG), a group of international leaders with broad experience of financial markets, to advise the IASB and the FASB on their response to the crisis. I was fortunate enough to be joined by a talented and diverse group of people on the FCAG. I am proud of the report that we published and I believe that we got to the heart of the issues. That really was the beginning of a journey that has ended with my appointment to lead the IASB. It was that experience that stirred my interest in accounting. Since then, my financial reporting baptism has continued with spells as Chairman of the technical committee of the International Organization of Securities Commissions (IOSCO) and, most recently, as Chairman of the Monitoring Board of the IFRS Foundation, oversight body of the IASB.
An opportunity for global reform
My understanding of the broad policy landscape is perhaps why the Trustees approached me to lead the IASB. Why did I accept? First, while I have served the public interest in the Netherlands, I relish the idea of being able to make a difference at a global level—to be in a position to provide the highest levels of transparency that I believe in and to raise standards internationally. Second, I believe that my experience and contacts outside of the pure financial reporting world will be of benefit as the IASB takes its rightful place as an important cog in the global financial system. Third, while I am not a technician by background, I do have a clear idea of, and strong support for, the fundamental principles underpinning the standards. Sometimes you need an outsider to come in and ask the basic questions — why do we do it like this?—in order to facilitate change. Finally, I would like to think that I will be able to continue to steer the IASB towards its goal and, in turn, deliver a great product to the market.
I am fortunate to have a strong Vice-Chairman in Ian Mackintosh, former Chairman of the UK ASB. I will work closely with Ian and we will share much of the international outreach work.
We have a lot on our plate right now. Our first priority is to complete the remaining convergence projects with the FASB to the highest possible standard and to ensure that they have benefitted from a truly exceptional outreach programme. We will not be able to please everyone, but I believe we are on the right path to deliver high quality, principle-based standards that enhance transparency to investors and other users of financial statements.
As this work approaches completion, we can begin developing a post-convergence agenda. We will shortly publish a consultation document that sets out some ideas but more importantly is designed to solicit feedback. What is in urgent need of fixing? How should we best deploy the limited resources at our disposal? We want to hear your views.
At the same time, we need to help complete the missing pieces of the IFRS jigsaw, and an important element of that is encouraging the United States to come on board. IFRSs are already permitted for use by non-US companies listed on American markets, and I am optimistic that the US Securities and Exchange Commission (SEC) will move to fully incorporate IFRSs into the US financial reporting regime shortly. The US is the single largest national financial market, with the most developed and mature national accounting standards. It seems reasonable to me that the SEC takes its time to make the appropriate transitional arrangements, however it is clear that US companies would welcome some certainty in the near future. The SEC’s decision will certainly have consequences elsewhere in the world, with several other major economies waiting to see what happens before finalising their own plans to adopt.
My remaining priority is to strengthen both the IASB’s institutional relationships, and the respect for the independence of the organisation. By that, I mean to deepen our engagement with those around the world who are impacted by our work, and to ensure they have a sense of ownership and buy in to the product that we are developing on their behalf.
The IASB is a young organisation—not yet a teenager but certainly growing up rapidly. I am fortunate to have inherited an energetic and smart group of people who really are trying to do the right thing and act in the public interest. With the 15 board members and 54 technical staff coming from 26 countries, we really are a diverse bunch.
We have many challenges. Despite this diversity, we are an organisation with global impact operating out of a single office in London. The internal structures will evolve as the organisation adapts to its global responsibilities. In many areas such as outreach I believe we are truly world-class; in others we have improvements to make.
The need for global financial reporting standards has never been greater. I relish the opportunity to lead the IASB and to complete the work that David Tweedie and his colleagues began in 2001.