New head of global accounting rule-maker expected to zero in on technical details

From WSJ: Andreas Barckow on Thursday succeeded Hans Hoogervorst as chairman of the International Accounting Standards Board.

The International Accounting Standards Board on Thursday got a new leader after a decade in which the standard-setter expanded its reach to more countries and implemented several key rule changes.

Andreas Barckow, an accountant who had served as president of the Accounting Standards Committee of Germany until February and who formally took over the role of chairman of the IASB this month, is expected to dive deep into the weeds on international accounting rules. That marks a contrast from former chair Hans Hoogervorst, who isn’t a qualified accountant and took more of a big-picture approach to promoting the standards around the world.

The London-based body sets international financial reporting standards, or IFRS, which apply in many countries where the U.S. and multinational companies operate. More than 140 jurisdictions have fully adopted the standards since 2001, while others, such as China and India, continue using their own rules, which largely overlap with IFRS.

Mr. Barckow takes the helm of the IASB in the wake of major accounting scandals at companies including German payments processor Wirecard AG, illustrating the need for accurate financial reporting and enforceable standards. Wirecard, which used IFRS, last year went bankrupt after disclosing a $2 billion accounting hole.

The 54-year-old Mr. Barckow plans to focus on the consistent application of the standards in different geographies and monitor accounting issues in areas such as cryptocurrencies and intangible assets that may warrant standard-setting, an IASB spokeswoman said. The IASB declined to make Mr. Barckow available for an interview.

His schedule at IASB will be set in part by the outcome of an agenda consultation that seeks the public’s views on what the board’s priorities should be over the next five years. The IASB is asking for feedback by Sept. 27. Future issues could include accounting for cryptocurrencies, climate risks, income taxes, government grants and inflation, according to consultation documents.

Mr. Barckow, like the 11 other IASB board members, was appointed to a five-year term with the potential for a second tenure. While running the Berlin-based ASCG, he worked closely with the IASB by serving as a member of its advisory groups, which provide advice on rule-making. Before that, he spent more than 13 years at professional services firm Deloitte, including as a partner for financial reporting matters. Deloitte is a sponsor of CFO Journal.

“Andreas is a pragmatic person who understands the underlying issues,” said Darrel Scott, a former IASB board member, referring to Mr. Barckow’s experience with technical accounting matters.

One project in particular will test Mr. Barckow’s skills, former board members said. At issue is a rule aimed at providing more consistent information to investors, which forces companies to remeasure their estimates of future cash flows from insurance contracts—for example, premiums and claims—for each reporting period, as opposed to remeasuring them partly or not at all. The European Union, which represents 27 countries using IFRS standards, considers making a portion of the rule optional to make it easier to implement—for example, by removing the need to measure contracts based on the year they’re issued.

That’s contrary to what the IASB wants as carve-outs reduce the level of comparability for companies and investors across jurisdictions. With a carve-out, a multinational firm might have to prepare two sets of financial statements for some of its subsidiaries, potentially resulting in less transparency.

The IASB plans to assess the impact of the rule, which goes into effect in 2023, after companies start implementing it, as it does with all standards.

The Insurance Bureau of Canada, an industry group representing insurers in the country, said applying the rule will be costly as companies might require help from consultants to interpret and apply it. Canada doesn’t plan on changes to the standard, said Linda Mezon-Hutter, chair of the country’s accounting standards-setter.

Continue reading.

Are you
podcast
potential?

Tell your story on our
podcast

Follow CFO Talks

CFO Talks

Quick links

Address:
The Workspace at The Club
Cnr Pinaster Avenue and 18th Street
The Club Shopping Centre, Second Floor
Pretoria
South Africa

The Workspace
Melrose Arch
44 Melrose Boulevard
Birnam
Johannesburg
South Africa

Tel. 012-643-1800 |
Email. info@cfotalks.com

Scroll to Top