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Andreas Barckow, Chair of the International Accounting Standards Board (IASB), delivered a keynote address at the EFRAG Conference on 10 December. He explained how IFRS Accounting Standards build transparency and trust in financial markets and connect global markets through a common financial language. He emphasised the IASB’s effectiveness relies on balancing transparency and trust with a deep understanding of diverse economic realities and priorities among jurisdictions. He concluded that while traditional financial reporting remains the foundation for analysing a company’s resilience and capacity for growth, it can be complemented by other forms of reporting to provide a broader perspective.  

This is the prepared text of the speech and may vary slightly from the oral version. 

Good morning to everyone, both present here in person and those joining us remotely for this annual conference. I am grateful to EFRAG for the invitation to deliver some remarks on how the IASB has been and still is advancing transparency and competitiveness in challenging times.

Connecting global markets with a common language

Twenty years ago, the widespread adoption of IFRS Accounting Standards ushered in a new era of transparency in corporate reporting. This pivotal moment was driven by Europe, which took the important step of mandating the adoption of IFRS Accounting Standards by listed companies across its member states. Australia, Hong Kong, New Zealand and South Africa also became early adopters around the same time, reinforcing the momentum. Today, close to 150 jurisdictions require the use of IFRS Accounting Standards for all or most publicly listed companies. Such widespread adoption underscores the global recognition and demand for consistent, high-quality financial reporting standards.

While IFRS Accounting Standards alone do not create competitiveness, they lay the foundation for businesses to compete effectively in the global economy. Transparency has been central to this and, today, it is worth reflecting on our progress and the shared challenges that we must navigate together with our stakeholders. 

Strengthening trust through transparency

Transparency creates trust in financial markets. Let me show you how we are advancing this trust through our mission and our work.

Our mission is to bring transparency, accountability and efficiency to financial markets around the world. We serve the public interest by fostering trust and financial stability within the global economy. The global acceptance of IFRS Accounting Standards as the common language of financial reporting across borders demonstrates this trust in action.

Let me highlight concrete examples from this past year that demonstrate how this common language translates into real-world benefits.

We reached a significant milestone this year with the publication of IFRS 18 which sets out requirements for presentation and disclosures in financial statements. This Standard represents the most significant change to the way financial performance is reported since IFRS Accounting Standards were introduced. IFRS 18 introduces three sets of requirements to improve companies’ reporting of financial performance:

  • First, companies will use a consistent and improved structure in their income statements with defined categories and subtotals, making comparisons easier for investors.
  • Second, IFRS 18 will also enhance the transparency of management-defined performance measures.
  • Third, it requires a more useful grouping of information in the financial statements.

These improvements will provide investors better information about companies’ financial performance and consistent anchor points for their analyses.

Our commitment to transparency also extends to ensuring that our existing Standards meet their objectives. This year, we concluded post-implementation reviews of two major Standards: one on the impairment requirements in IFRS 9 relating to financial instruments and the other on the revenue Standard, IFRS 15. These reviews confirmed that both Standards are providing investors with useful information. This real-world validation helps us ensure that our Standards are facilitating the reporting of transparent and trustworthy information in today’s unpredictable economic environment.

Acknowledging diversity in a connected world

Transparency and trust must be coupled with a deep understanding of diverse economic realities and priorities.

Our global reach means we need to be cognisant of the diverse stakeholder needs in economies with vastly different conditions. Different jurisdictions and regions are at various stages of economic development and will naturally have differing priorities. While our mission to help investors to make good capital allocation decisions receives universal endorsement, the practical reality can look very different depending on where you are from.

For example, some jurisdictions may be grappling with geopolitical and economic insecurity while others want to prioritise technological innovation to drive growth. These diverse economic realities influence how our Accounting Standards are implemented and understood. In this context, European perspectives on financial reporting are undoubtedly important but they represent just one part of the global landscape. We have to recognise and respect diversity and ensure that all voices are heard.

This brings me to a fundamental principle of our work. To be truly effective as a global standard-setter, we must consider the full spectrum of views that we receive, while remaining sensitive to local and regional issues. Considering diverse views does not mean that we can or that we should address every priority, but it does mean we need a transparent and structured approach to problem-solving.

We put this principle into practice through our open and inclusive process by actively engaging with stakeholders around the globe. Our project on intangibles illustrates this approach: our stakeholders agree that the current accounting for intangibles needs improvement, yet their views differ on both the problems and their solutions. This diversity of opinion is amplified by the rapid pace of change of today’s business world, where more and more companies find that traditional reporting paradigms do not faithfully reflect their business models, particularly when it comes to intangible value drivers. This makes our task both complex and urgent. Any solution we propose must be robust and practical for diverse business models and jurisdictions. In this environment of diversity and change, we are approaching the intangibles project through stakeholder consultation: first, by clearly identifying the problems that need solving, and then by understanding how we should stage our work to deliver timely improvements to the market.

Planning with purpose

Agenda-setting is how we plan with purpose, embedding our understanding of stakeholder needs into our long-term planning. One of the most frequent questions I receive is how we decide what makes it onto our work plan and what does not. As we approach our next cycle of agenda consultation, this question takes on even greater significance.

Our agenda-setting process is open and consultative. We publish our criteria, seek input and clearly communicate our decisions. This transparent and inclusive approach allows all stakeholders a voice in shaping our direction, even if we cannot address every concern as we balance diverse and sometimes competing demands.

In our 2022 Agenda Consultation, we applied specific criteria to evaluate potential projects, focusing on both impact and practicality. At its core, the selection process prioritises investor needs while ensuring the efficient use of resources. During the consultation, investors identified three high-priority projects that we are addressing:

While these projects received strong investor support, not every project on our agenda requires strong investor support to be prioritised. And nor can our agenda address every stakeholder’s concerns. The challenge is in making choices that maximise impact while respecting resource constraints. We must also carefully consider the cost of change. Changes to our Standards affect companies globally and have to be borne by those that requested the change and those that have not asked for any changes to be made. Balancing the need for improvement against the importance of stability means we set a high hurdle for any new project. As we prepare for our next agenda consultation, these considerations will continue to guide our work.

Relevance of financial reporting in a changing world

As we reflect on the progress we have made together and the steps we are taking to address current challenges, it is also time to turn our attention to the future of traditional financial reporting itself. Increasingly, our profession is being asked if traditional financial reporting has lost its relevance. My answer to this question is an emphatic ‘no’.

Traditional financial reporting remains at the centre of the corporate reporting universe, offering a consistent and reliable lens into a company’s financial position and performance. Financial statements serve as anchors in corporate reporting, providing crucial context and grounding. Investors use this information to assess future cash flows and to hold management to account.

At the same time, the growing emphasis on connectivity is reshaping how we view the purpose and scope of financial reporting. Traditionally, financial statements were considered the central hub, with all other information connecting back to them. Today, this perspective is evolving to recognise the importance of connecting financial statements to other forms of general purpose financial reporting, such as sustainability disclosures, to provide a more holistic picture of a company’s activities.

Financial statements have their limitations, and we must be realistic about what they can and cannot do. They follow agreed-upon concepts, principles and conventions. Financial statements are designed to capture the present and document the past, not predict the future. This boundary ensures consistency and reliability but also limits the scope of what financial statements can provide.

These limitations contribute to what I call an expectation gap. While investors and other stakeholders increasingly seek forward-looking insights, financial statements alone cannot address every question they have. This is where connectivity becomes vital by providing meaningful links between different types of information such as sustainability and narrative reporting. When these different types of reporting are effectively connected, investors gain a more holistic picture and a clearer understanding of how various risks and opportunities interlink and how a company’s current position relates to its future prospects.

However, we must be mindful that this bridge cannot be built by simply changing accounting requirements or by overloading financial reports with excessive complexity. The boundaries of financial statements exist for a purpose. While transparency is crucial, it is not a cure-all for the problems we face. Making information visible does not solve underlying challenges. Reporting on climate risk is a case in point: transparency alone around how companies are affected by and contributing to climate change will not by itself change whether we will have a habitable planet to live on. But transparent information on climate-related risks is an important prerequisite for decision-makers to take informed action.

The path forward lies in recognising that effective reporting requires a clear understanding of the purpose of each report. The traditional financial statements remain our foundation for understanding a company’s resilience, its ability to weather challenges and its capacity for growth, but other forms of reporting can expand our perspective. Success lies not in choosing between traditional and new forms of reporting, but in understanding how they complement and connect to each other. When information flows seamlessly between different types of reporting, we can build a holistic picture of corporate performance and prospects—though it is important to acknowledge that even then, not every question will have an answer.

Conclusion

Our role is to ensure that financial reporting continues to meet the needs of an ever-changing world while respecting the diverse global context in which we operate. Our success in advancing global financial reporting standards has always been built on shared understanding and common purpose.

To meet the challenges ahead I would argue that transparency should be combined with vigilance to identify emerging issues, adaptability to address them effectively, and inclusivity to reflect the breadth of perspectives that shape our global financial ecosystem. By staying true to our mission but also evolving to meet new demands, we can ensure that financial reporting can continue to build trust and support global markets. I am confident that by working together, we can achieve this.

I am pleased that we will explore different perspectives on financial reporting in our panel session to follow.

Thank you for your attention. I look forward to our continued dialogue on these important issues.