18 September 2012

Françoise Flores, EFRAG Chairman: Turning a compliance exercise into a communication performance

EFRAG Chairman Françoise Flores spoke at FEE's 'Corporate Reporting of the Future' conference on promoting effectiveness of disclosures to financial statements as a contribution towards better integration of various corporate reports.

On 18 September, FEE (Federation of European Accountants) held a conference on Corporate Reporting for the Future. EFRAG Chairman Françoise Flores presented in the first session the EFRAG/ANC/FRC joint Discussion Paper ‘Towards a Disclosure Framework for the Notes’. 

Ms Flores mentioned that the success of a better integration of various corporate reports including the financial report would undoubtedly serve investors and other users of company reports. Integration of information means a significant gain in relevance, as well as significant reduction costs of reporting analysis. Much has to be accomplished by various stakeholders before such a stream of improvements come to the fore. And EFRAG believes that in promoting improvements in the financial reporting arena, it can valuably contribute to the overall effort.

This is the reason why EFRAG initiated two years ago, as part of “proactive activities”, that is EFRAG's contribution to stimulating debate where improvement in financial reporting is needed, a research effort into ways to improve effectiveness of disclosures to financial statements.

EFRAG has observed that:

1. most jurisdictions – and this is the case of the EU – have delegated to the IASB the responsibility for setting requirements applicable to financial statements, not to financial reporting in general; therefore delineating what belongs to financial statements can be seen as having priority in the work of the IASB, without impeding later progress in a wider context;
2. there is urgency in bringing concrete improvements in practice, and embracing immediately the wider context would undoubtedly delay implementation in practice of revised disclosure requirements. It is fair to say that the disclosure overload and lack of effectiveness triggered by compliance with IFRS strikes the notes to financial statements first and foremost.

Those who make their best efforts to promote integrated reporting may consider EFRAG's approach as counter-intuitive to the progress they wish to suggest. In the present circumstance, the problem identified that can be remedied by the IASB lies with financial statements. This is the reason why EFRAG believes that the IASB should tackle it with a high level of priority, addressing the necessary broader picture only when improvements to disclosures in the notes to financial statements are already well underway. In the meantime, EFRAG will take its share in activating the debate about disclosures in a wider context.

Press release

Full speech

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