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With regard to the prospects for global accounting standards, Mr Hoogervorst said that global accounting standards are an inevitable consequence of global financial markets. They are needed to ensure that investors can be adequately protected in a global economy. National or regional accounting standards cannot do this; only IFRSs can.
The ongoing global financial crisis has increased the urgency of this work. It is difficult for policymakers to deliver a globally-consistent approach to financial reform without having a globally-consistent way to describe financial performance. That is what IFRS does. And that is why the G20 leaders have repeatedly called for a rapid move towards global accounting standards. The transparency provided by high-quality financial reporting standards provides the bedrock on which to build a better, more efficient and more resilient financial system.
The US will shortly consider if and how to incorporate IFRSs into its own financial reporting regime. Mr Hoogervorst believes the prospects are good for the SEC to make a positive decision on IFRSs. He suspects that both China and India will be heavily influenced by the upcoming decision in the United States.
Mr Hoogervorst commented on Latin American adoption of IFRSs that full adoption of IFRSs means that international investors are entirely comfortable with the financial statements of Brazilian companies. The risk premium associated with unfamiliar financial reporting requirements is eliminated, thus reducing the cost of capital and attracting greater inward investment.
In addition to adopting the main set of standards, Brazil has also adopted the 'IFRS for Small and Medium-sized Entities' (SMEs), with more than half a million Brazilian companies estimated to be using these 'IFRS for SME's. That is quite a remarkable statistic.
Across Latin America, adoption of IFRS is widespread. Almost all of the major Latin American economies now speak the same financial language. In the last 12 months we have seen these economies working towards the establishment of the Group of Latin American accounting Standard-Setters, or GLASS.
This is a very important initiative and Mr Hoogervorst said he was delighted to be attending the inaugural meeting of GLASS in March 2012. Countries around the world are organising themselves into regional forums to discuss financial reporting matters. Europe has the EFRAG, Asia-Oceania has the AOSSG, and now Latin America has the GLASS.
In conclusion, the future agenda and the IASB's priorities were discussed. First, the IASB needs to complete the remaining convergence projects with the FASB to the highest possible standard, and to do so in a way that benefits from the input that they receive from the entire global financial reporting community. In the coming months, the IASB will publish revised joint proposals for leasing and revenue recognition accounting standards, with a view to completing these projects during 2012. The boards are in general agreement on how to proceed, but it is important that they re-expose the proposals to avoid unintended consequences, given the importance of this work. The boards are also working hard to develop a common approach to financial instruments accounting and to the accounting for insurance contracts.