Reserved, technical, conservative... is generally what comes to mind when picturing the writer of an accounting standard. That was the image our IFRS team took to Frankfurt, to the annual IFRS conference hosted by the International Accounting Standards Board (IASB). Our plan was to corner one IASB board member in particular for insights—Mary Tokar, who literally helps write IFRS standards (and who, incidentally, worked as a partner within the KPMG network for several years).
Mary's CV is impressive: six-year member of the IFRS Interpretations Committee; KPMG global leader for employee benefit and share-based payment accounting; lead SEC representative for international accounting issues; IASB member since 2013 (now in her second term in 2017).
Luck, it seemed, was with us: Mary, walking our way after the first session, saw that we were from KPMG and struck up a conversation with us (finally, a reason to be grateful for those awkward conference name badges!) Far from the dry accounting standard writer we had imagined, Mary was outgoing, friendly, and held our attention effortlessly. And the best part? She agreed to an interview!
IFRS 9, 15, and 16
We were especially interested in hearing what she had to say about new standard implementation, given the continued focus on the IFRS 9, 15, and 16. On this topic, the challenge for the IASB has been timing: issuing three major new standards with effective dates all within a year is no easy feat. Apparently, more than the drafting, it's getting the buy-in of the board that poses the challenge—all requirements have to be agreed upon and comments on public discussion papers considered. Mary explained that back-and-forth considerations are the most time-consuming: you work to balance the views of every major stakeholder, but at some point you just need to yell STOP! and publish the draft version, or else the process will never stop.
For each new standard, the IASB sets up a Transition Resource Group (TRG), which provides support during the implementation phase by discussing stakeholder questions on the new requirements and reporting any critical implementation issues encountered. In this process, the IASB's final aim is actually twofold: to assist users by providing more guidance on the standards and to identify areas in the standard that require clarification.
The future of communication
Recently, the IASB published a discussion paper on the treatment of equity instruments under IFRS 9, providing a big-picture view on why certain requirements appear in that standard. (Read our article on this topic here). We asked Mary if the IASB plans to publish more discussion papers like this, as it was the first of its kind.
She explained that the IASB is conscientious about wanting to reach people, and that the discussion paper was one method of outreach—but they also pursue other media like webcasts and statements to illustrate their reasoning behind decisions. She also said that they are interested in sharing more feedback from investors, preparers, regulators, and auditors, which made us happy to hear, given the necessary complexity of many new standards and amendments to standards.
The disclosure problem
The IASB's disclosure initiative began several years ago, leading to a regular production of amendments and practice statements (read up on its latest clarifications here and here). The research that it puts into these documents has generated some interesting insights, like how auditors, regulators, and companies have quite varied expectations when it comes to the level of disclosure needed in financial statements.
In that context, we asked Mary about the alignment of these expectations. In response, she was quite clear that the gap would never be fully closed due to diverging interests, but added that the IASB is working on this issue. Specifically, it is managing stakeholder expectations and encouraging changes in certain thinking and behaviour, in hopes of achieving a more qualitative and entity-specific approach rather than a quantitative or checklist-based one.
The best of IFRS
The conference was hugely beneficial, no question about it—we got a sneak peek at the IASB's project pipeline, learnt about the thought processes behind writing standards and providing guidance, and met so many knowledgeable and inspiring people like Mary Tokar!
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