The World Council of Credit Unions asked an International Accounting Standards Board panel during a London forum this week to ease compliance burdens on credit unions and improve member disclosures.
Michael Edwards, World Council vice president and chief counsel, told the group of international accounting standards representatives Monday that complex financial disclosures are often difficult to understand for those who are not financial professionals.
In response, panelist Russell Picot, HSBC group chief accounting officer and recent co-chair of the Financial Stability Board's Enhanced Disclosure Task Force, said disclosure simplification would be useful and companies should have regulatory leeway to eliminate unnecessary disclosures, reduce the use of accounting jargon and use disclosure language that key stakeholders can comprehend easily, the World Council said.
IASB Board Member Patricia McConnell said some aspects of financial disclosures, such as footnotes on accounting policies, are not very useful in practice because retail investors do not usually read them, and accounting practitioners are familiar already with the accounting policies in question.
“All credit unions would benefit from reduced accounting compliance burdens,” said Brian Branch, World Council president/CEO.
“Easily understandable financial disclosures will be most useful to credit union members in developing countries where shares and deposits are often not protected by savings guarantee schemes and many members do not have a university education,” Branch said.
The panel will report to the full IASB within the next two months about the World Council and others' comments on how to improve financial disclosure requirements.
The IASB sets International Financial Reporting Standards, which apply to credit unions in a growing number of jurisdictions including Australia, Brazil and Canada.
The IASB and FASB are also in the process of converging IFRS with U.S. Generally Accepted Accounting Principles (U.S. GAAP), which will make U.S. credit unions subject to accounting rules that are the same as IFRS in most respects.
In April 2012, IASB and FASB issued a report predicting that they would jointly issue final accounting standards regarding financial instruments, leases and insurance contracts by mid-2013.
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