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IFRS: new challenges, new opportunities for accountants

IFRS: new challenges, new opportunities for accountants


Financial statements need the input of more stakeholders than accountants, and accountants, too, need to think more broadly – their skill set is becoming more valuable as the need for better communication and broader valuation expertise becomes a normal part of the job.

Accounting standards are designed to make the principles and requirements clearer for financial report preparers and investors alike. International-based financial reporting (IFRS) continues to evolve as standard-setters seek to address the demand for more and better information in financial statements.

Debate continues around what should be in the hard numbers and what should be in the commentary accompanying financial statements. Corporate value associated with intangibles remains a challenging area for capture in financial statements. What is the effect of climate change on corporate bottom lines, and should cryptocurrencies be included as assets?

Sue Lloyd, vice-chair of the London-based International Accounting Standards Board (IASB), and Kris Peach FCPA, chair and CEO of the Australian Accounting Standards Board (AASB) have overseen some major changes in accounting standards in recent years, and they can see new challenges on the horizon for the profession.

Lloyd says that because of the way the new standards are written, being a good accountant requires enhanced skills, such as a better understanding of risk management – expected credit losses for example.

“Accounting used to be very rules-based, but to account for loan-loss provisions [under IFRS 9 Financial Instruments], you need to understand risk management and know how the business is run. It’s far more interesting than it was in the past.”

Lloyd and Peach believe accountants are becoming more important and more involved with the front office.

Peach notes that companies such as Wesfarmers are asking how they can improve documents, so they are not just ticking the boxes and submitting a stock annual report as required by the Australian Securities and Investments Commission (ASIC).

“They’re creating a document that talks to investors, and that requires a different mindset. With the standards we’re writing, it means you have to apply judgement far better than under a rules-based regime. Softer skills are becoming important.”


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