Andreas Barckow, Chair of the International Accounting Standards Board (Board), delivered his inaugural speech at the World Standard-setters Virtual Conference on 27 September 2021. Speaking to over 140 delegates from 70 jurisdictions, he reflected on the first three months of his role and discussed the Board’s agenda in the coming years. He also shared his thoughts on how the Board can collaborate more closely with national standard-setters.


Introduction

Good morning from London and a warm welcome to all of you to the first day of this year’s World Standard-setters Conference, the traditional opening event of what some call our ‘festival of accounting week’! I am looking forward to seeing and speaking to many of you at this conference as well as the autumn meetings of the International Forum of Accounting Standard Setters (IFASS) and our Accounting Standards Advisory Forum (ASAF) that follow this conference.

I would have preferred to be with you in person, but the pandemic is not over yet. We have put health and safety first, which is why the conference is taking place in virtual format.

Virtual does not have to mean artificial or less exciting. Our team—led by Fred Nieto and spearheaded by Roberta Ravelli—has done a marvellous job in pulling together a great agenda with plenty of opportunities for interaction. We have provided pre-recorded sessions as background for each agenda topic, thus allowing as much time as possible to engage and exchange views with you, answer questions and seek your input. Please do give your feedback on this approach in the survey provided.

As many of you will know, I spent six years as Chair of the German accounting standard-setter. I’d like to think that experience has provided good insight into your needs. Meeting those needs will be a central theme of this speech, and a theme for my time as IASB Chair.

I will address three areas during these opening remarks. First, I’d like to share some early impressions in my role. Second, I’ll offer some thoughts about our agenda for the coming years. And finally, I want to expand on the relationship between the IASB and national standard-setters, reflecting my previous life.

First impressions

I am now three months into my new role, having formally taken over from Hans Hoogervorst on 1 July. Hans did a remarkable job leading the organisation and I’m sure we all wish him well in the next phase of his life.

As a new Chair, I surely want to make my mark, set out my ideas and pursue my priorities. And, clearly, I do have my views and ideas. However, I am conscious that all of us—people in our organisation as well as yours—are stretched given the enduring pandemic and its consequences on our lives. So, I felt this was simply not the right time to invoke or even to consider big changes, especially because most of them would address medium to longer-term issues. From my perspective, the changeover has been effective, seamless and quiet—just as I had hoped.

Given my previous role, I have had very few surprises since joining the IASB. In the end, technical issues are technical issues, wherever you sit. The key difference between working for a global versus a national standard-setter stems from the wider community that the IASB serves and considers. Building consensus and creating standards that work globally is more difficult because we need to take diverse economic backgrounds and reporting challenges into account.

My onboarding and change-over had to be done remotely, but I was pleasantly surprised how well it went. I clearly benefitted from the experience our organisation has gained during the pandemic. Even more so, I have benefitted from the commitment, warmth and enthusiasm from staff and fellow Board colleagues. A big thank you to everyone at the IFRS Foundation—I am grateful for all the help and support.

I was overwhelmed by the many personal messages—both from you standard-setters and other stakeholders—offering invitations to meet and expressing a desire of getting to know me in person as soon as the situation permits. I would like to honour many of your requests as soon as it is feasible.

I chaired my first Board meeting in July, and our first in-person Board meeting in about a year took place last week. We are constantly monitoring the covid-19 situation. I hope we can soon hold meetings with our advisory and consultative bodies in person and admit observers to our Board meetings again. But as I said in the beginning: safety first!

Let me now turn to our agenda for the next years.

Agenda consultation

Our third agenda consultation closes today. I sincerely hope you have all contributed and sent in your comment letters or responded to our survey. If not, it’s not too late—you still have a few hours left… Honestly, you will have no better chance to influence the Board’s future agenda.

Every five years we go to market and ask our stakeholders where they suggest we spend our resources. These consultations are important steps in our due process because we want to make sure we use our limited resources in the most effective manner. An agenda consultation is not simply a beauty contest or an auction: it's not a question of counting votes. We take all feedback seriously.

The Board sought feedback on which areas we should concentrate, on the criteria against which we should allocate resources and on the mix of activities, encompassing standard-setting—including considering amendments to the IFRS for SMEs Standard—maintenance and consistent application and digital financial reporting.

The arrival of a new Chair does not mean we reset everything to zero. I am surely important for the organisation, but just not that important! We have an ongoing work plan based on feedback to the previous agenda consultation and we remain committed to completing those projects—unless you tell us otherwise. We also need to allocate resources to undertake post-implementation reviews of IFRS 9, IFRS 15 and IFRS 16. Consequently, new projects will need to fit in with ongoing work—just to set expectations when it comes to our 2022–26 work plan.

As part of our outreach, we have listened to feedback from our advisory groups and consultative bodies. Three consistent messages have emerged. First, we’re advised to be mindful of how many consultations and how much change we impose on stakeholders. Second, take sufficient resources into account for dealing with our expected new sibling, the proposed International Sustainability Standards Board (ISSB). And third, please do something about intangibles!

Let me touch on each of these three topics. Before I do that, let me emphasise that the Board has not yet seen the complete feedback to the agenda consultation and, hence, has not yet discussed it. So my comments are (a) personal reflections and (b) on areas we have heard pretty consistent feedback. We plan to review all feedback over the next quarter and discuss it with our advisory bodies before finalising the work plan early next year.

Consultations and changes

The IASB is fully aware that we have asked a lot of our stakeholders, including national standard-setters, over the last 18 months. Every consultation is a balancing act. We must keep our projects’ momentum and keep an eye on set timelines, while not constantly throwing new consultation documents over the fence for you to consider.

We have tried to stagger publication dates and has significantly expanded consultation periods to allow stakeholders more time to respond. We have received very positive feedback for these measures, but we also recognise limits to how much more we can ask.

It is worth reminding our stakeholders that most of the documents the Board has been consulting on over the last 18 months will not lead to immediate changes in financial reporting. The Board needs to deliberate the feedback before taking any final decisions. And once a final standard or amendment is published, we will always allow companies enough time to prepare for any changes before they become effective.

Working with a sister board

The Trustees will shortly decide whether to proceed with a sister board to the IASB dealing with sustainability-related financial disclosures. If they decide to go ahead, then we will need to devote Board and staff time to ensure there is connectivity between the IASB and the ISSB. I am personally committed to working closely with my counterparts on the other Board and am standing ready.

Many stakeholders who responded to the Trustees’ two consultations have highlighted the importance of connectivity and joined-up standard-setting. Having joined-up standard-setting means that each Board commits resources and at the same time benefits from the other Board’s expertise and resources. Working together and developing requirements from joint principles and concepts not only is desirable but is a necessity. It is, in fact, one of the key selling points for having both Boards in the same organisation. I completely agree with this view.

Having said so, it is too early for me to present views as to what precisely connectivity will mean in practice, what measures are to be taken, how and where we might work together while acknowledging each other’s independence, especially because some key areas still require the Trustees’ decision-making. But let me assure you that we will be diligently factoring in resources for working with the proposed ISSB when deciding our agenda priorities for the coming years.

Intangibles

Finally, intangibles. I have spoken at many public events about intangibles, and the need to address the accounting in this area. So I agree with those that have raised this issue. Our Standard on intangibles, IAS 38, is more than 20 years old and has never been revisited other than for consequential changes resulting from other projects. We all recognise the significance of intangibles, especially self-generated intangibles, has increased substantially over the last two decades.

Today many—if not most—companies around the globe operate in the service sector. They attract a lot of attention in the capital markets and, in fact, some of the richest market valuations. However, we don’t capture well the basis of their value creation or consumption. This is the key reason why, personally, I would like us to explore what we can do to increase transparency in this area. Obviously, this will have to be a decision taken by the full Board and only after due consideration of the entire feedback we receive, so stay tuned!

Let me then turn to my last area for today: the relationship between you and us.

Working with national standard-setters

It goes without saying that national standard-setters are a very important stakeholder group for the IASB. You may smile when hearing me say this, given my background as a former head of a national standard-setter. How could I not hold that view?

Coming from a national standard-setter is tremendously helpful in my new role. It allows me to draw upon my existing contacts, to view the IASB’s work from the perspective of a national standard-setter and to use that perspective to consider what is working well and where we can get even better.

National standard-setters are essentially the eyes and ears of the IASB. They also have valuable expertise. You will always be closer to local stakeholders, especially investors, than the IASB can ever be, no matter how much outreach we do. Furthermore, you are more likely to see issues arising in your jurisdiction far sooner and help us to resolve them before they boil up in other jurisdictions as well.

You provide a very helpful interface when it comes to the IASB liaising with stakeholders from your jurisdiction—whether in conducting outreach, addressing agenda item requests that have come to the IFRS Interpretations Committee or developing educational material, to name but a few. And I deliberately used the word ‘interface’ to demonstrate that I very much see this as a two-way rather than a one-way street.

I am of course aware that we do have a variety of standard-setters represented in this conference. The standard-setters have different legal setups—private versus public; different size—big versus small; different experience—mature versus building capacity; different mandate—using IFRS Standards for listed companies versus for all companies, accounting versus holistic corporate reporting. The IASB must cater for all and not single anyone out. Rather, we should be looking for the optimum working arrangements, taking your demands and experiences into account.

One area that I am keen to explore is whether we can tap your capabilities more to help us in standard-setting. We all have resource constraints, so we should have a natural incentive to see where working together would be possible. Now, there are a lot of ‘ifs’ and ‘buts’ on either side, and I am not blind to these points. We need to acknowledge that the IASB cannot compromise its independence, just as you cannot put aside your own responsibilities.

But that is not to say that we cannot work together at least on certain parts of the process. The post-implementation review is an obvious area where national standard-setters are of tremendous help already in stimulating, soliciting and channelling feedback. Equally, we have seen many examples of excellent research and outreach by national standard-setters that could, when the scope is clear and the project is well managed, help us to abridge the early stage in a project without cutting corners.

To set everyone’s expectations: I do not want to overpromise and then potentially underdeliver. However, coming from a national standard-setting background, I have a reasonably good understanding of what quite a few of you are able to do. Hence, I think we should consider the untapped opportunities you hold. So let me discuss this properly and thoroughly internally as part of the IASB setting course for the next five years before I get back to you.

Concluding remarks

I have talked about key areas that I think are important when thinking about our future work programme—stakeholder’s capacity to respond to, implement and apply new requirements; ensuring connectivity between the IASB and the ISSB’s work; and intangibles—as well as why the relationship with national standard-setters will always be an important cornerstone in our work.

I hope that you will enjoy the rest of the conference, and I look forward to seeing you again soon.

Followable tags

Strategy and governance
Sustainability-related reporting
National standard-setter

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