Ambitious sentences in the IASB mission statement.
I have been wondering if I can have some fun with the mission statement of the International Accounting Standards Board (IASB). And surprise, I have found things to write about. There are two exessive sentences in the mission statement.
First
“Our work serves the public interest by fostering trust, growth and long-term financial stability in the global economy.”
In this sentence, they claim that their work fosters trust in the global economy. That is extravagant. Okay, their standards are used in 140 countries but not in the USA or in China, the two largest economies, so ‘global’ is an exaggeration. A ‘small part’ of the global economy would be more accurate.
Further this statement tries to convince us that accounting standards foster growth in the economy. Now accounting standards might foster many things, but certainly not economic growth. Perhaps they have a team of people circulating the world talking to governments with the slogan:
‘Adopt our standards to foster economic growth in your country’.
Ridiculous no? Who would believe that?
Not only do accounting standards foster growth, the IFRS claims their standards foster ‘long-term financial stability’. I don’t get that one either! Take note: not only financial stability but long-term stability. This claim makes me speechless. Or more precisely ‘wordless.’
Now if we take these two exaggerated claims out of the statement, it does not read quite so well:
“Our work serves the public interest by fostering trust in ‘a part of’ the global economy.”
This is more accurate, but it doesn’t sound very encouraging as part of a mission statement.
Second
The last sentence of their mission statement is not quite so outrageous, but perplexing:
“Use of a single, trusted accounting language lowers the cost of capital and reduces international reporting costs for businesses.”
First their ‘single, trusted accounting language’ is the IASB’s accounting standards. Why not just admit, instead of trying to be poetic, their standards are not a language but simply rules. Cost of capital does not belong here. Or could they be introducing an exam question?
“IFRS accounting standards lowers the cost of capital. Discuss in less than 2500 words. You have two hours.”
The second part of the sentence is not true. IASB standards do not reduce international reporting costs. They increase them. Companies that report whatever they want, without standards, have lower reporting costs. That is logical.
And what is the problem even if standards increase the cost of reporting costs? There are so many other benefits to having standards, why invent one which is untrue and doesn’t matter.
Perplexing, as I have already said. I have no idea why they stuck this sentence to the end of their mission statement. It makes the whole statement weak; whereas they were trying I am sure, to finish on a strong note.
In case you don’t believe me here is the full mission statement of the IASB.
IASB mission statement
Our mission is to develop IFRS Standards that bring transparency, accountability and efficiency to financial markets around the world. Our work serves the public interest by fostering trust, growth and long-term financial stability in the global economy.
IFRS Standards bring transparency by enhancing the international comparability and quality of financial information, enabling investors and other market participants to make informed economic decisions.
IFRS Standards strengthen accountability by reducing the information gap between the providers of capital and the people to whom they have entrusted their money. Our Standards provide information needed to hold management to account. As a source of globally comparable information, IFRS Standards are also of vital importance to regulators around the world.
IFRS Standards contribute to economic efficiency by helping investors to identify opportunities and risks across the world, thus improving capital allocation. Use of a single, trusted accounting language lowers the cost of capital and reduces international reporting costs for businesses.